The South Korean antitrust watchdog said Thursday that it will raise the asset ceiling for its conglomerate watch list for the first time in seven years as part of its efforts to pave the way for local mid-sized business groups to conduct more activities.
In a report submitted to an economy-related ministers' meeting held in Seoul, the Fair Trade Commission will increase the minimum asset criteria from the current 5 trillion won (4.3 billion) to 10 trillion won in September, with state-run corporations to be excluded from the list.
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Fair Trade Commission in Sejong City (Yonhap) |
As a result, the number of conglomerates subject to the tough FTC surveillance will drop to 28 from the current 65.
Under South Korea's fair trade law, the affiliates of large business groups with assets of 5 trillion won or more are restricted from making equity investments in affiliates or offering loan guarantees to one another.
The Samsung Group is on top of the list with its 59 affiliated units having combined assets of 348.2 trillion won, followed by Hyundai Motor Group with 209.7 trillion won and Korea Electric Power Corp., the state-owned power supplier, with 208.3 trillion won in asset.
The watch list, first introduced in 1987, was intended to prevent excessive economic power concentration in conglomerates, so their affiliates are strongly regulated by the FTC and related laws of taxation, employment and financing.
"The 37 excluded business groups will benefit from the asset ceiling hike. They will be able to promote and expand new businesses more easily as they will be exempted from investment restrictions and other legal barriers," the watchdog said. "The FTC will focus on monitoring the bigger groups in accordance with the purpose of the fair trade law."
The FTC said it raised the asset ceiling to keep up with the fast-changing economic trend and size and help mid-sized companies do business in a more favorable condition.
Since the FTC raised the ceiling to 5 trillion won from 2 trillion won in 2009, South Korea's gross domestic product expanded
50 percent to 1,560 trillion won in 2015 from 1,040 trillion won, while the total of the listed groups' assets more than doubled to 2,340 trillion won from 1,160 trillion won over the period.
In April, Kakao Corp., the operator of the biggest mobile messenger Kakao Talk, and Celltrion Inc., a biopharmaceutical firm that ranks at the top of the tech-heavy KOSDAQ bourse, were included on the antitrust watch list as the 65th and 59th large business groups, respectively, sparking a heated debate that the expanded FTC index inhibits business activities.
The inclusion had been expected to deal a blow to Kakao which has been busy preparing for the launch of an internet-only bank later this year, as it would have faced tougher regulations on the establishment and operations of a bank.
But the latest FTC decision to lift the asset ceiling to 10 trillion won will give wings to the company.
"Along with our deregulation drive, we will strengthen monitoring of the market to enhance business transparency and open competition," said the watchdog.
Shares of Kakao rose 2.27 percent to close at 99,000 won on the KOSDAQ bourse on Wednesday, while Celltrion gained 0.83 percent to 97,000 won. (Yonhap)
