[Q&A] "Kim Beom-seok Coupang Chairman Not Designated as Owner, No Special Privileges... No Possibility of Private Interest at Present"

Kim Jae-shin, Vice Chairman of the Fair Trade Commission. (File photo)
[Image source=Yonhap News]

[Sejong=Asia Economy Reporter Joo Sang-don] Kim Jae-shin, Vice Chairman of the Korea Fair Trade Commission, stated on the 29th, "The designation of Coupang Co., Ltd. as the same person (dong-il-in) of Coupang was confirmed according to the standards and procedures of our 'Monopoly Regulation and Fair Trade Act'." He drew a clear line regarding the controversy over preferential treatment for not designating Kim Beom-seok, Chairman of Coupang's Board, as the head (dong-il-in).

Vice Chairman Kim said at a briefing on the designation results of the '2021 Publicly Disclosed Business Groups' held at the Government Complex Sejong on the same day, "Coupang is subject to all the obligations applied under the Fair Trade Act in the same way as domestic business groups."

He emphasized, "The difference between groups with a head and Coupang lies in the obligation to disclose the same person and the application of self-dealing regulations to the company of the person or their relatives. However, after closely reviewing the materials submitted by Coupang, at this point in time, there is no domestic company owned by Kim Beom-seok personally or by his relatives."

The following are the main contents of the Q&A session between Vice Chairman Kim and reporters on that day.

▲What is the reason for not designating Chairman Kim as the head (dong-il-in)?

=There is no dispute that the Coupang business group, established under Korean law and operating in Korea, is effectively controlled by the natural person Kim Beom-seok. However, the issue of whether to designate him as the same person under domestic law, which would impose new obligations and penalties, is a different matter. Designating the same person is a kind of legal act subject to administrative disposition and could be subject to legal disputes. Therefore, it was necessary to make a clear judgment from factual and legal perspectives. We also considered that we have consistently designated the top domestic company as the same person for foreign business groups.

▲You mentioned improving the same person designation system. Is there a possibility that Chairman Kim will be designated as the head in the future?

=The issue of whether to designate Chairman Kim as the same person is not something I can comment on at this stage. We need to refine the standards, requirements, and procedures of our designation system more precisely and consider comprehensively whether law enforcement is feasible when designating foreigners and whether there are unforeseen problems. Institutional improvement should precede this. Depending on the results of this improvement, if the standards and requirements are met, designation might be possible, but it is premature to comment on whether Chairman Kim will be designated after the system improvement.

Regarding 'what the content of the system improvement will be,' it is necessary to enhance transparency and predictability. We need to consider past cases of changing and designating the same person, how management succession actually occurs in business groups, and the types and trends. Also, our enforcement decree includes 'criteria for determining effective control,' such as shareholding requirements and control requirements. We will comprehensively consider whether these need supplementation and prepare clearer and more specific standards than currently exist. In addition to these standards, we will also review ways to clearly establish and operate procedures for confirming the same person.

▲Besides Hyundai Motor and Hyosung, are there other business groups that requested a change of the same person?

=Last year, there were 64 publicly disclosed business groups, of which 55 had a head. We conducted a first review for all 55. For example, we selected groups with changes in company status or potential changes. We requested detailed materials related to the designated person from those groups and asked the others to submit detailed materials if there was any intention or reason for change. Through this, we received detailed materials related to the same person from 15 business groups. Among them, three applied for a change of the same person: Hyundai Motor, Hyosung, and one more group, which I cannot disclose.

▲Is the system improvement limited to the same person designation system, or does it also include the publicly disclosed business group system itself?

=It should be understood as limited to the same person. Publicly disclosed business groups are set with total assets of 5 trillion won or more, and the designation criteria for mutually restricted business groups were revised last year through a full amendment of the Fair Trade Act to link with 0.5% of GDP. The designation criteria for mutually restricted business groups will be linked to the size of GDP going forward.

▲Among the 71 publicly disclosed business groups designated this year, is there a possibility of applying different regulations to IT companies with governance structures different from traditional conglomerates?

=It is difficult to say that. There are many issues raised about IT groups. IT groups tend to focus on specific industries or fields, and their ownership and governance structures are simpler and more transparent, showing improved aspects compared to traditional conglomerates. However, considering that it is still early for issues like expansion into non-core industries, internal transactions, succession, or self-dealing to materialize, our position is that there is no need to view IT business groups differently at this point.

▲Regarding Hyundai Motor, you judged that 'considering Honorary Chairman Chung Mong-koo's health, the possibility of his return to management is low.' What is his current health status that leads to this judgment?

=We cannot disclose detailed information about Honorary Chairman Chung's health. However, we considered his health status and various possibilities of his return to management. We received a medical certificate regarding Chairman Chung. We carefully checked whether he is actually going to the company, receiving reports, and engaging in substantive management activities.