1.

Key Takeaways
 

• The Korea Fair Trade Commission (the “KFTC”) announced for public comment from September 9 to September 30, 2026 a proposed amendment to the Merger Notification Preparation Guidelines (the “Proposed Amendment”) that would add “organized personnel” to the definition of “business” if such organized personnel and the technology and knowledge possessed by such personnel combine to perform core functions of business activities.

• The Proposed Amendment is intended to bring large-scale talent recruitment by global Big Tech companies targeting AI startups (so-called “acqui-hire” transactions) within the scope of merger filing obligations and is expected to affect all domestic and foreign companies pursuing acqui-hire transactions in or outside Korea.

• The KFTC will collect comments during the public comment period and plans to finalize the Proposed Amendment through a vote by the full Commission. The Proposed Amendment will take effect immediately upon publication in the Official Gazette and will apply to the transactions that trigger the notification obligation after the effective date.
   

2.

Background

Article 9, Paragraph (1), Item 4 of the Monopoly Regulation and Fair Trade Law (the “FTL”) and the Merger Notification Preparation Guidelines designate the acquisition of all or a significant part of another company’s business as one of the reportable types of transaction. The current provisions are based on the transfer of “business”, referring to property rights (both assets and liabilities) that act as an organized and organic whole for the business purpose of a company, based on the Commercial Code concepts and court precedents. Therefore, there is no explicit provision addressing the transaction structures that achieve the same effect as a business transfer through the transfer of personnel only, and recently, there have been concerns that this new form of transaction was falling into a regulatory blind spot with respect to merger reviews.

The number of acqui-hire transactions in which global Big Tech companies strategically recruit key personnel from AI startups has been increasing worldwide, and competition authorities in various countries have been actively responding to this development. The KFTC’s Proposed Amendment can be viewed as being in line with this global trend.
 

3.

Key Details of Proposed Amendment

The key provisions of the Proposed Amendment are as follows.
 

(1)

Expanded Definition of “Business”

The current Merger Notification Preparation Guidelines define “business” as an organized and organic collection of property rights that function for the company’s business purpose, including goodwill, patent rights, trademark rights, and other intangible property rights. Under the Proposed Amendment, if organized personnel and the technology and knowledge possessed by such personnel combine to perform core functions of business activities, such personnel will be included within the scope of “business.”
 

(2)

Revised “Significant Part” Standard

Under the current Merger Notification Preparation Guidelines, the transferred business constitutes a “significant part” of a business if (i) the transferred portion constitutes an independent business unit or causes a significant decrease in the transferor’s revenue and (ii) the transfer price is at least 10% of the transferor’s total assets or KRW 10 billion. The Proposed Amendment will add to the existing thresholds a new threshold under which a transfer of a “significant part” of a business will be recognized if key personnel are transferred to the acquiring company and, as a result, the acquiring company can conduct the same business activities as the transferor.
 

(3)

Revised Transfer Price Calculation and Gun-Jumping Criteria

The Proposed Amendment provides that in the case of transfer of organized personnel, the transfer price will include monetary payments and other economic benefits, regardless of its characterization. This includes consideration for the waiver of rights related to the transferred personnel (e.g., non-compete release payments) and royalties for intellectual property necessary for the business activities. As a result, various forms of economic compensation commonly used in acqui-hire transactions can be reflected in the calculation of the transfer price.

With respect to gun-jumping, the current Merger Notification Preparation Guidelines provide that the closing of a transaction takes place at the time of completion of payment, delivery of movable property, and registration of real estate and trademarks. The Proposed Amendment will add “the transferor’s cessation of the business that it was conducting” as the definition of closing in acqui-hire transactions.
 

4.

Implications and Next Steps

The Proposed Amendment is expected to affect all businesses pursuing acqui-hires in and outside Korea.

First, companies should be aware that in addition to business transfers and asset transfers, transactions that de facto achieve the same effect as a business transfer through various set of agreements, such as personnel transfer agreements, cooperation agreements, and non-compete release agreements, can now be subject to the KFTC’s merger review. For example, if a Big Tech company recruits key personnel from an AI startup, it may constitute transfer of all or a significant part of a business, and thus, be subject to the merger filing obligation under the FTL.

In particular, for technology-focused companies, organized personnel may represent a significant portion of its enterprise value, and it is, therefore, necessary to examine whether personnel transfer could constitute a reportable type of transaction.

Furthermore, companies contemplating acqui-hire type transactions should carefully review the possibility of having to file a merger notification with the KFTC from the deal structuring stage and reflect the filing and clearance process into the broader transaction timeline.
 
Despite the Proposed Amendment, there is not yet more specific guidelines or interpretations on how the related concepts and various types of transactions may affect the application of the Proposed Amendment. Therefore, companies should continue to monitor the KFTC’s future interpretation and potential amendment to the Merger Review Guidelines in relation to acqui-hire transactions.