On January 25, 2024, the Korea Fair Trade Commission (KFTC) proposed amendments (Amendments) to the Monopoly Regulation and Fair Trade Act (MRFTA) were approved by the National Assembly of Korea.
The Amendments include (i) merger notification exemptions for transactions deemed not to raise any anticompetitive concerns, (ii) implementation of commitment procedure to enhance the efficiency and effectiveness of merger reviews, and (iii) introduction of an electronic information processing system for the submission, delivery and notification of electronic documents during the KFTC deliberation procedure.
The Amendments now will be sent to be promulgated by the President of Korea. Amendments (i) and (ii) above will be effective from 6 months thereafter and amendment (iii) will be effective from 3 years thereafter. As for amendment (i), however, notification of the business combination subject to merger notification based on the currently existing filing thresholds (prior to amendment (i) taking effect) will be required.
Certain details of the Amendments are set forth as follows:
1. Merger Notification Exemptions (Amendments for MRFTA Articles 9 and 11)
- To reduce the notification burden for companies, transactions involving (i) the establishment of PEF, (ii) mergers/business transfers between parent and affiliate companies, (iii) interlocking directorates that involve less than 1/3 of board members, and (iv) mergers between affiliate companies, where the merged entity’s total assets and worldwide turnover are less than KRW30 billion, are exempt from merger notification.
Merger Type | Details on Amendments |
Establishment of PEF (Amendment for MRFTA Article 11 (3) 4) |
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Mergers/business transfers between parent and affiliate companies (Amendment for MRFTA Article 11 (1) 4) | As a merger or business transfer between the parent company and a subsidiary* under the Commercial Code is unlikely to cause new anticompetitive concerns, such transaction will be exempt from merger notification. * Company with shares exceeding 50% of the total number of issued shares of another company (Article 342-2 (1) of the Commercial Code) |
Interlocking directorates (Amendment for MRFTA Article 11 (1) 3b) |
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Mergers between affiliates with respective values less than KRW 30 billion (Amendment for MRFTA Article 9 (5) provisio) |
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2. Introduction of Commitment Procedure for Merger Control (Amendments for MRFTA Articles 13-2 and 14 (2))
- Prior to the Amendments, the KFTC imposes remedies on transactions that may have an anticompetitive effect by determining its own remedies based on the limited information received from the transacting parties, such as information included in the merger filing and unofficially submitted remedies, among others.
- Under the Amendments, the transacting parties, which have considerably more information than the KFTC on relevant markets and the viability of implementing remedies, may officially submit proposed remedies to resolve anticompetitive concerns.
- Most major competition authorities including the US Department of Justice and Federal Trade Commission, the European Commission and the Competition and Markets Authority, have already implemented systems that allow the proposal of remedies by the parties in their merger control regimes. Having been ratified by the National Assembly, the KFTC expects to enhance the consistency of its domestic and foreign merger reviews by allowing the transacting parties to propose officially remedies in transactions raising anticompetitive concerns.
- It is anticipated that the KFTC will notify further the details on the method and procedures for submission.
MRFTA Amendment | Details on Amendment |
Article 13-2 (1) and (2) |
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Article 13-2 (3) |
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Article 14 (2) |
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3. Introduction of Electronic Information Processing System for Submission and Delivery of Electronic Documents (Article 98-2 of the MRFTA)
- During the KFTC’s deliberation procedures, hard copies of documents are exchanged between the KFTC and the party; this is an inconvenience for the party and creates administrative inefficiencies for the KFTC.
- The Amendments will allow the submission, delivery and notification of documents through an electronic information system managed and operated by the KFTC (without requiring an in-person visit to the KFTC).
MRFTA Amendment | Details on Amendment |
Article 98-2 (1) |
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Article 98-2 (3) and (4) |
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Articles 98-2 (5) |
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