Ban on Merger Between Top 1 and 2 in Public Official Academy Market
First Time in 8 Years Since SK Tel and CJ HelloVision
The Fair Trade Commission (FTC) has ultimately disapproved the merger and acquisition (M&A) of Gongdangi, the No. 1 player in the civil servant academy market, by Megastudy, the No. 2 player.
On the 21st, the FTC announced that it has prohibited Megastudy Education from acquiring 95.8% of the shares of ST Unitas (hereinafter Gongdangi).
The FTC judged, "This corporate merger is a horizontal combination in which Megastudy, the No. 2 in the civil servant exam lecture market, acquires Gongdangi, the No. 1, raising significant concerns about substantially restricting market competition."
According to the FTC, Gongdangi introduced a pass product in 2012 that allows students to choose various subjects in the civil servant academy market, which had been centered on offline lectures and single-subject courses.
Gongdangi rapidly grew by supplying pass products at affordable prices and aggressively recruiting popular instructors, dominating the market with a monopoly until 2019, before Megastudy entered. The pass product price, initially around 300,000 KRW at launch, soared to as high as 2.85 million KRW in 2019.
The FTC stated, "Megastudy's attempt to acquire Gongdangi occurred at a time when the civil servant academy market, previously monopolized by Gongdangi, was beginning to reorganize into a competitive structure between Megastudy and Gongdangi. The merger raises very high concerns about competition restriction as a significant competitor would be eliminated."
In particular, the FTC pointed out, "After the merger, there is a very high possibility that popular instructors and students will concentrate in these companies, which raises concerns about increased tuition fees and harm to examinees." Economic analysis conducted to assess the impact of the merger on tuition fees also showed that the merged companies have incentives to raise prices.
Furthermore, considering Megastudy's brand awareness and trustworthiness in the education market, as well as management know-how and financial strength, the FTC believes that competitors will face limitations in immediately responding to the merged companies.
The FTC also judged that this could accelerate market concentration toward the merged companies, further raising concerns about competition restriction.
This decision marks the first time in eight years since the FTC disapproved the SK Telecom's acquisition and merger of CJ HelloVision in 2016.
The FTC added, "This is significant in maintaining price competition in the civil servant academy market and protecting 400,000 examinees. Considering Megastudy's brand awareness and financial strength in the education market, it is also meaningful that the FTC preemptively blocked the potential damage to competition that could arise from the merger."
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