Korean Academy of Business Administrators Calls for Improvement of Large Business Group Designation System

- The Large Business Group Designation System Introduced in 1986 Has Reached the End of Its Lifespan
- Addressing Practical Issues of the Same-Person System and Proposing a Shift from Ex-Ante Regulation to Self-Regulation

Experts have pointed out that the designation system for large business groups under the Fair Trade Act has not maintained consistency and has failed to sufficiently reflect social and economic realities, indicating a need for improvement.

The Korean Academy of Business Administrators (President: Lee Woonghee, Professor at Hanyang University) raised these concerns at the symposium "Problems and Improvement Measures of the Large Business Group Designation System," held at the Korea Chamber of Commerce and Industry on April 23, 2025. The symposium highlighted the gap between recent legislation and practical realities.

In his opening remarks, Lee Woonghee, President of the Korean Academy of Business Administrators, emphasized, "Although this system has a history of nearly 40 years, it has not achieved sufficient alignment with the times, so improvement is necessary."

Ji Inyeob, Professor of Economics at Dongguk University and the first presenter, argued, "The criteria for designating business groups have changed continuously since the introduction of the system, but there has been ongoing criticism that these criteria are set arbitrarily by policy authorities. Therefore, a more scientific approach is required in system design." He particularly pointed out, "In cases like the management rights dispute between Korea Zinc and Young Poong, it has been difficult to view the business group as a single economic entity, and such cases have occurred multiple times." He thus argued that the current same-person (dongil-in) system lacks practical relevance.

Following this, Ahn Taejun, Professor at Hanyang University Law School, also stated, "The current criteria for designating public disclosure-targeted business groups or business groups subject to cross-shareholding restrictions are set too low, resulting in an excessive number of regulated business groups. In order to efficiently use the Korea Fair Trade Commission's regulatory resources and to effectively achieve the regulatory goal of curbing economic concentration, regulation should focus on a small number of top large business groups that pose a significant risk of adverse effects from general concentration at the national economic level." He further remarked, "Applying domestic cross-shareholding or circular shareholding regulations to foreign companies should be reconsidered in light of international comity and respect for national sovereignty."

During the discussion, Kim Yoonkyung, Professor at the School of Northeast Asian International Commerce and Logistics at Incheon National University, specifically pointed out, "Despite the implementation of the 2024 guidelines on the criteria and procedures for determining the same person (dongil-in), if the owner's relatives do not participate in affiliate management or engage in financial transactions, the main affiliate corporation is designated as the same person rather than the individual owner. This has led to reverse discrimination against domestic companies in practice." Kang Sangyeop, Professor at the Peking University School of International Law, agreed with Professor Kim's argument and further criticized, "The Fair Trade Act and its enforcement are uniquely inconsistent with the established legal framework for personal information protection." He also stated, "In Korea, even among cohabiting family members, requesting or accessing personal information can be unreasonable or illegal. Nevertheless, the law now imposes an 'obligation' to collect and submit the personal information of numerous same-person-related individuals who do not live together to the Fair Trade Commission. This is questionable."

Kwon Jaeyeol, Professor at Hanyang University Law School and chair of the discussion, concluded the symposium by stating, "Although the designation system for large business groups has been operated inconsistently with an emphasis on uniquely Korean circumstances, its problems are now becoming clear in various areas. Therefore, comprehensive reform of the system is urgently needed."