Amendment to the Fair Trade Act Passed at the Cabinet Meeting on the 20th
The "Partial Amendment to the Monopoly Regulation and Fair Trade Act," which expands the exemption scope for M&A filings with low competition restrictions, passed the Cabinet meeting on the 20th. This is expected to ease the filing burden on companies.
According to the Fair Trade Commission (FTC) on the 20th, the amendment to the Fair Trade Act containing these provisions passed the Cabinet meeting on the same day and will be submitted to the National Assembly after presidential approval.
The FTC currently reviews filings for mergers between companies with assets or sales exceeding a certain scale (filing company: 300 billion KRW, counterparty company: 30 billion KRW), and if necessary, imposes corrective measures to address harms caused by competition restrictions.
According to the amendment, the types of corporate combinations exempt from filing include ▲ establishment of private equity funds (PEF) ▲ mergers and business transfers between parent and subsidiary companies under the Commercial Act. Since a parent company under the Commercial Act already controls the subsidiary solely, mergers and business transfers between them are unlikely to cause new competition restrictions and are therefore excluded from filing requirements. Additionally, ▲ in the case of mergers between affiliated companies where the counterparty’s total assets or sales are less than 30 billion KRW, and ▲ where an executive holds less than one-third of the total executives of another company and is not the CEO, filing obligations will also be exempted.
Companies will be exempt from filing in these cases.
Companies will be able to officially submit voluntary corrective plans to promote autonomous and swift M&A processes. Currently, the FTC designs and imposes corrective measures to resolve competition restrictions, but going forward, a system will be established allowing companies to voluntarily submit corrective plans themselves. The FTC will evaluate the submitted plans and conditionally approve them if deemed sufficient to resolve competition restrictions.
Furthermore, an "Electronic Adjudication System" will be introduced to allow electronic submission, delivery, and notification of documents such as business resolutions and respondents’ opinions. The electronic adjudication system refers to a computerized information processing system that can create and manage electronic documents necessary for FTC deliberations and receive or deliver deliberation documents. Documents, videos, or audio materials submitted to the FTC can be digitized and submitted electronically in file form through the electronic system.
The FTC plans to actively participate in the legislative process at the National Assembly to ensure these expected effects are realized and will also work on revising subordinate regulations such as enforcement ordinances and notifications to ensure smooth operation of the amendment.
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