Donggyu Lee, Advisor at Kim & Chang Law Office, Publishes Paper
‘Changes in Measures to Suppress Economic Power Concentration under the Monopoly Regulation and Fair Trade Act and Policy Recommendations’
As the Yoon Suk-yeol administration is pushing for improvements to the large business group (chaebol) system, opinions have emerged that not only the Fair Trade Act but also related legal frameworks such as tax law, commercial law, corporate law, and capital market law, which are connected to curbing economic power concentration, should be reviewed from a comprehensive perspective.
On the 3rd, Lee Dong-gyu, an advisor at Kim & Chang Law Office, made this claim in his article "The Process of Change in Economic Power Concentration Suppression Measures under the Fair Trade Act and Policy Direction Suggestions," published in the June issue of the academic journal Competition Journal issued by the Korea Fair Competition Federation. Lee is an expert in corporate governance and fair trade law and policy, having served as the Secretary-General of the Korea Fair Trade Commission from 2006 to 2008. He stated, "The economic power concentration suppression measures, introduced in 1987 and having undergone 22 changes, have overall been restructured to minimize ex-ante direct regulation and enhance ex-post market monitoring functions," adding, "It is desirable to maintain this trend."
He further emphasized, "For areas where ex-ante preventive regulation is deemed necessary, it is important to consider regulating them in connection with individual legal systems that differ by industry and function," and "Measures to curb the economic power concentration of large corporations should be approached from a comprehensive perspective, taking into account the entire legal framework, including the Fair Trade Act, tax law, commercial law such as corporate law, financial laws like capital market law, and individual industry- and function-specific laws." He suggested that a comprehensive approach is needed to consider whether means to suppress economic power concentration are necessary through the Fair Trade Act separately from commercial law, and to identify points where related laws are insufficient or have gaps.
The Yoon Suk-yeol administration, presenting the direction of easing corporate burdens through improvements to the large business group system as one of its national tasks, is seeing the Korea Fair Trade Commission push for adjustments to the designation criteria for publicly disclosed business groups known as large business groups. Since 2009, if total assets exceed 5 trillion won, the group is designated as a controlling shareholder and must bear various disclosure obligations. The Fair Trade Commission is reviewing the relaxation of the 5 trillion won asset threshold. Specifically, options under consideration include linking the criteria to the Gross Domestic Product (GDP) and adjusting (raising) the threshold amount.
Lee advised, "I hope the case from July 2008, when the Fair Trade Commission, as part of its large business group policy reform, raised the designation asset threshold from 2 trillion won set in 2002 to 5 trillion won, significantly reducing the number of regulated large business groups, will be referenced." He added, "It is also necessary to consider unifying the dual system of 'publicly disclosed business groups' and 'mutual shareholding restricted business groups.'" The Fair Trade Commission decided last year to change the designation criteria for mutual shareholding restricted groups from 10 trillion won in assets to 0.5% of GDP starting next year.
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