Monopoly Regulation in Korea

1.     Are mergers and acquisitions subject to merger control in your jurisdiction? If so, please describe the regulatory framework and authorities?

 Mergers and acquisitions are regulated by Monopoly Regulation And Fair Trade Act(“MRFT”) Article 7. The main purpose of this article to prevent concentration of economic power by mergers and acquisitions and unfair mergers and acquisitions.

 Mergers and acquisitions which practically suppress competition in a particular business area is prohibited, the specific criteria of “substantial restriction of competition” and “unfair method” is prescribed in the ordinance, rule and Criteria of Screening Combination of Enterprises enacted by Fair Trade Commission(“FTC”).

 The FTC, a national administrative agency, is in charge of Combination of Enterprises, which is entitled to receive the prior or ex post facto notification of Combination of Enterprises according to consolidated asset and has a authority to regulate illegal Combination of Enterprises.

2.     What are the relevant threshold/triggering events?

 A.    The enterprises which is obliged to notify Combination of Enterprises

 Upon Combination of Enterprises not all of the enterprises but enterprises above certain assets are liable to notify it.

 The enterprises which are obliged to notify Combination of Enterprises is enterprises which have a size of total value of assets or turnover including total value of assets or turnover of affiliated over KW 100,000,000,000 and in case where officers hold the concurrent positions enterprises which have a size of total value of assets or turnover over KW 2,000,000,000,000.

 B.    Combination of enterprises which should be notified

 Not all of the Combination of Enterprises must be notified but the Combination of Enterprises falling under any of the following must be notified. And the Combination of enterprises should be also notified in the case where the combination of enterprises falling under any of the following is made between a company not subject to notifying the combination of enterprises and a company subject to notifying the combination of enterprises

 ①    In case of holding not less than 20 percent (15 percent for a stocklisted corporation or Association-registered corporation under the Securities and Exchange Act of the total number of stocks issued by other companies (excluding non-voting stocks pursuant to Article 370 of Commercial Act)

 ②    In case where officers hold the concurrent positions

 ③    In case of conducting acts falling under merger with other companies and an acquisition by transfer, lease or acceptance by mandate of the whole or main part of a business of another company, or the acquisition by transfer of the whole or main part of fixed assets used for the business of another company

 ④    In case of acquiring not less than 20 percent of stocks of a company to be newly established

3.     Please give a broad overview of notification requirement. In particular:

Is notification mandatory or voluntary?

 If relevant thresholds are met, it is mandatory to provide the FTC with prior or ex post facto notification. However, there is no need to notify the FTC in the following cases.

 ① Where the small and medium enterprise start-up investment company or the small and medium enterprise start-up investment association under subparagraphs 4 and 5 of Article 2 of the Support for Small and Medium Enterprise Establishment Act, has combined with the founder under subparagraph 2 of the same Article or a venture business;

② Where the venture capitalist or the venture business investment association under Article 41 (1) and (3) of the Specialized Credit Financial Business Act has combined with the new technology enterprise under subparagraph 1 of Article 2 of the Korea Technology Credit Guarantee Fund Act; and

③ Where the company subject to reporting on the combination of enterprises has combined with a securities investment company under the Securities Investment Company Act (excluding the securities investment company for acquisition of businesses under Article 79 (2) of the same Act).

Notification is not also needed in the case where the head of the central administrative agency concerned has consulted in advance with the Fair Trade Commission with regarding to the combination of enterprises under the relevant Acts.

When should a transaction be notified?

 In principle notification should be made prior to Combination. Notification of the Combination of Enterprises shall be made within thirty days after the date of such Combination.

 But where one or more companies involved in a combination of enterprises falling under a merger with other companies, an acquisition by transfer, lease or acceptance by mandate of the whole or main part of a business of another company, or the acquisition by transfer of the whole or main part of fixed assets used for the business of another company and in case of acquiring not less than 20 percent of stocks of a company to be newly established notification of the combination of enterprises by larger companies shall be made within thirty days after the date of conclusion of contracts for merger or takeover of business, or after the date of resolution of shareholders' meetings as to the participation in the establishment of a company. So in this case ex post facto notification is needed

Is it possible to obtain formal or informal guidance prior to notification?

 Where a person intends to make a combination of enterprises , he may request the Fair Trade Commission to determine whether such combination may be categorized as one which practically suppresses competition even before the period of notification 

 Upon the request of a determination, the Fair Trade Commission shall give notice of its decision to the requesting company within thirty days.

Who should notify?

 In case of holding stocks acquiring company, in case of officers holding concurrent positions holding company, in case of merger both of the parties to it, in case of acquisition of other’s business both of the parties to it, in case of acquiring stocks of a newly established company acquiring company.

        When there are two or more companies that are liable to file a report, these companies shall file the report jointly: Provided, That this shall not apply to the case where the Fair Trade Commission has designated one of the companies belonging to an enterprise group comprising of the obligator to file as the representative responsible for filing the report.

To which authority should notification be made?

FTC

Gwanmoonro88

Jungang-dong 1

Gwachonsi

Korea

Tel: 82-2-50302387

E-mail: intnldiv@ftc.go.kr

Website: http://www.ftc.go.kr/

What is the form of notification?

 All notifications and reports must be submitted in the form attached to “Method to notification of Combination of Enterprises” enacted by FTC.

Is there a filing fee? If so, how much?

 There is no requirement to pay a fee for filing a merger or business acquisition notification or a ex post facto notification in respect of a share acquisition with the FTC.

Is there and obligation to suspend the transaction pending the outcome of an investigation?

 No one who has made a report shall register the fact of a merger, execute the contracts for the takeover of business, or acquire stocks until thirty days after making such a report: Provided, That the Fair Trade Commission may, if deemed necessary, shorten the period, or extend it within the limits of sixty days from the date following the expiry date.

4.     Please outline the procedure and timetable?

 ①    The Fair Trade Commission may, if it deems that a suspicion of violating the provisions of this Act exists, make a necessary investigation ex officio. Any person may, if he deems that a fact violating the provisions of this Act exists, report it to the Fair Trade Commission

 ②    The Fair Trade Commission may, if it deems it necessary to enforce this Act, take the following measures

 i) Summons of the parties concerned, interested parties, or witnesses to a hearing and seeking their opinions;

ii) Designation of appraiser and entrustment of appraisal; and

iii) Issuance of an order to an enterpriser, an enterprisers' organization, an officer or employee thereof for the report on the cost and business situation or for the presentation of other necessary materials or things, or detention of presented materials or things.

 ③    The Fair Trade Commission may, where it deems it necessary, have a public official under its control enter the office or business place of an enterpriser or an enterpriser's organization in order to examine the business and management situation, books, documents, electronic materials, voice-recording materials, video materials and other materials or things and hear statements from the parties concerned, interested parties or witnesses at a designated place

5.     How much publicity is given about merger enquiries? Can the parties request that certain information is kept confidential?

        There is no separate provision on keeping secrecy of information provided. In principle, the trial and resolution by the Fair Trade Commission shall be disclosed. However, this shall not apply to the case where the Fair Trade Commission deems it necessary to protect trade secrets of an enterpriser or enterprisers' organization.

6.     Can third parties make representations and, if so, how?

 Any person may, if he deems that a fact violating the provisions of MRFT exists, report it to the Fair Trade Commission. Only interested third parties can participate in a hearing and represent their opinions.