Expanding the Scope of Merger Notification Exemptions, Introducing a Merger Remedy Discussion System, Introducing Electronic Submission and Delivery of Documents During the Hearing Process

On January 25, 2024, the National Assembly passed five amendments, including the amendment to the Monopoly Regulation and Fair Trade Law (“FTL”). The amendment to the FTL aims to improve the merger review system, the Korea Fair Trade Commission’s (“KFTC”) hearing process, and the corporate disclosure system.
 
Going forward, business combinations that are unlikely to raise anti-competitive concerns, such as establishment of private equity funds (“PEFs”) and mergers between a parent company and its subsidiary, will be exempted from the merger filing obligation. In the case of business combinations that are likely to raise anti-competitive concerns, the KFTC will invite companies to formally submit remedy proposals for discussion and can issue final corrective orders based on the submitted remedy proposals. This amendment is expected to reduce the burden on merging entities and lead to a more effective and efficient implementation of merger remedies.

The amendment will also introduce an electronic system for the submission and delivery of documents during the KFTC hearing process. The KFTC plans to establish this electronic data processing system with the goal of commencing operations in the first half of 2027. The electronic document submission and delivery system is expected to eliminate the inconvenience and cost of printing and submitting paper documents during the KFTC’s hearing process.
 
In addition, the amendment will ease the burden of overlapping disclosure requirements on companies subject to corporate disclosure requirement. The amendment provides a statutory basis for (i) removing the “changes in executives” item from the “list of important disclosure items of unlisted companies,” and (ii) exempting companies from administrative fines for minor violations of the disclosure obligation.
 
The minimum annual sales threshold, which is applied when determining a market dominant entity, will be raised from KRW 4 billion to KRW 8 billion, reducing the regulatory burden on small and medium-sized enterprises (“SMEs”) and venture companies.
 
In addition, the amendment prohibits the Chair of the Korea Fair Trade Mediation Agency’s (“KOFAIR”) Dispute Mediation Council from engaging in any for-profit business other than his/her prescribed duties as the Chair.
 
The provisions on submission and delivery of electronic documents will enter into force three years after the date of promulgation. The provisions on increasing the minimum annual sales threshold for determining a market dominant entity will enter into force on the date of promulgation. The provisions on prohibition of for-profit activities by the Chair of the KOFAIR’s Dispute Mediation Council will enter into force on February 9, 2024. Other provisions on changes to the merger control system and the corporate disclosure system will enter into force six months after the date of promulgation.
 
As the KFTC announced its plan to revise subordinate regulations as soon as possible (e.g., by establishing administrative rules that set forth details regarding the operation of the remedy proposal submission system) prior to the enforcement of the amended FTL, it is advisable for companies to monitor the specific developments concerning the enactment, amendment and enforcement of such subordinate regulations.
 
The details of the amendment are as follows:
 

[Korean Version]