Lowers the corporate MA barrier… Easing the evaluation criteria for competitors

The Fair Trade Commission decided to judge the market dominance of the merged company by recognizing potential competitors who did not enter the market in the M&A examination. The intensity of monitoring of platform operators’ attempts to strengthen market monopoly will be increased.

In the ‘2021 business plan’ announced on the 22nd, the FTC said, “We will improve the screening criteria so that potential competitors with significant market entry are considered as real competitors and review competition restrictions.” Currently, when the market dominance of an M&A merger is more than 50%, it is difficult to obtain a merger approval from the FTC unless there are special cases such as the acquisition of a marginal company. This is a key clause that the FTC is virtually disallowing to take over of the elegant brothers of Delivery Hero Korea, a delivery app Yogiyo operator.

However, recognizing leading companies entering the delivery app market such as Naver and Kakao as competitors has the effect of increasing the possibility of M&A approval. An official from the Fair Trade Commission said, “In the information and communication technology (ICT) industry, where large platform companies can enter the market at any time and in the process of competition, the number one company can be replaced at any time, the M&A barrier will be lowered. We expect that the revision will spur innovation.”

In addition, the FTC will focus on supervising the abuses of platform operators’ dominant market power. The relevant illegal acts are specifically stipulated in the newly established’Guidelines for Examination of Single Acts in the Online Platform Field’. In particular, the policy is to strictly examine the behavior of platform companies to acquire competitors for the purpose of strengthening their monopoly.

The work plan also contained various deregulation details. Private equity (PEF) full-time groups are excluded from the designation of large corporate groups subject to disclosure, and M&As for investment purposes such as PEF are exempted from filing a business combination.

Some areas have been strengthened. In cosmetics and food, when the head office of a large company tries to sell online at a lower price than the agency supply price, the agency owners must agree.

Reporter Jihoon Lee/Gyeongmok Noh [email protected]

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