On May 7, 2024, the Cabinet Meeting approved the Proposed Amendment to the Enforcement Decree of the Monopoly Regulation and Fair Trade Law (“FTL”). The Proposed Amendment sets out the criteria for determining the “same person” (i.e., the person deemed to be controlling a large business group) when the Korea Fair Trade Commission (“KFTC”) designates large business groups. The Proposed Amendment will be promulgated upon approval by the President and come into force immediately.
The Proposed Amendment modifies the existing requirement that limits the “same person” designation to only natural persons. It now allows a domestic company or a non-profit entity to be designated as the “same person” under certain conditions, even if there exists a natural person who effectively controls the large business group. This change is consistent with the initial draft released on December 28, 2023, which underwent a public commenting period until February 6, 2024. (For more details, refer to our previous newsletter (Link) on the initial draft.)
However, the final version that the Cabinet Meeting approved on May 7 departs from the initial draft in the following ways:
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(1) |
The Proposed Amendment now provides that if a large business group, for which a domestic company or a non-profit entity is designated as the same person, no longer meets the exception requirements in Article 38 (4) 1 and Article 38 (4) 2 of the Proposed Amendment, the KFTC can replace the same person with a natural person. |
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(2) |
The Proposed Amendment explicitly requires that the designation of a domestic company or a non-profit entity as the same person must be made at the request of an interested party, a requirement that was absent in the initial draft. |
Due to this amendment to the Enforcement Decree, the KFTC’s yearly announcement of large business group designations, which typically occurs around May 1 of each year, has been postponed. However, according to the current Enforcement Decree of the FTL (Article 38 (3)), the KFTC is still required to make these designations by May 15. Therefore, the designation process for large business groups is expected to be completed by May 15 at the latest.
