On January 25, 2024, the National Assembly passed an amendment to the Monopoly Regulation and Fair Trade Law (“FTL”). The amendment bill was earlier approved by the Cabinet on June 20, 2023, as mentioned in our previous newsletter (Link). This amendment is expected to bring significant changes to the current merger control regime, including merger notification thresholds, as well as introducing a new remedy discussion process and changing the hearing process of the Korea Fair Trade Commission (“KFTC”).
We summarize the key details of the amended FTL below:
1. |
Expansion of Merger Notification Exemptions |
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Establishment of PEFs (the actual language in the proposed amendment bill specifically refers to the establishment of PEFs under the Capital Markets and Financial Investment Business Act, and therefore, companies will need to monitor how the KFTC will treat the establishment of PEFs under the laws of other countries), which have a legal personality but are still merely pools of capital to be invested in other companies, because their formation alone would have no substantive impact on competition (a PEF’s acquisition of a target company will continue to be notifiable if the relevant thresholds are met).
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Statutory mergers/consolidations and business transfers between a parent company and its subsidiary (i.e., a company over which the parent company already has sole control through a direct shareholding of more than 50%).
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Interlocking directorships involving less than 1/3 of the board members (excluding the representative director) because they would not enable the appointing company to exercise decisive influence on major decisions of the receiving company.
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Inter-affiliate mergers involving a target (on a stand-alone basis) with total assets or worldwide revenue of less than KRW 30 billion.
2. |
Merging Parties’ Submission of Remedy Proposal |
3. |
Electronic Submission and Delivery of Documents during Hearing and Deliberation Process |