Korean Antitrust Statute Is Amended Amendments Expand Merger Filing Exemptions and Introduce Voluntary Merger Remedy Procedure

On February 6, 2024, the Korean government enacted amendments to the Korean antitrust statute, i.e., the Monopoly Regulation and Fair Trade Act (MRFTA). These amendments, most notably, (i) expand merger filing exemptions, (ii) introduce a voluntary remedy procedure for mergers, and (iii) implement an electronic filing system for producing documents to the Korean antitrust enforcer, i.e., the Korea Fair Trade Commission (KFTC), and accessing documents issued by the regulator. The amendments are expected to ease regulatory burdens on companies and contribute to a more efficient regulatory regime.

An overview of the key amendments is as follows.

A. New Merger Filing Exemptions and Voluntary Merger Remedy Procedure

(ⅰ) Additional Types of Transactions to Be Exempt From Merger Filing Requirement Under the amended MRFTA, the following types of transactions will be exempt from the merger filing requirement as they are unlikely to pose serious competition concerns: (i) the establishment of a private equity fund; (ii) a merger or business transfer between entities constituting a corporate parent and its subsidiary under the Commercial Code; (iii) an interlocking directorate (excluding the representative director) accounting for less than one-third of the total board seats; and (iv) an inter-affiliate merger-byabsorption involving a target valued at less than KRW 30 billion (approx. USD 23 million). In 2022, mergers corresponding to the above four categories accounted for approximately 42% of all merger notifications to the KFTC. Thus, the amended MRFTA is expected to reduce regulatory burdens on businesses significantly and free the KFTC staff to focus on mergers presenting truly substantive issues.

(ⅱ) Voluntary Merger Remedy Procedure

Under the current MRFTA, the KFTC bears the sole responsibility for devising merger remedies, if any, as well as imposing them on the merging parties. By contrast, the amended statute will (i) allow the merging parties to propose in writing during the KFTC merger review a remedy addressing any competition concern arising from the merger and (ii) authorize the KFTC to issue conditional clearance for the merger after reviewing the proposed remedy and modifying it if necessary. This new procedure is expected to expedite the merger review process, particularly for global transactions, which might otherwise be subject to conflicting remedies imposed in other jurisdictions.

B. Electronic Document Submission and Delivery System

The amended MRFTA provides for an electronic filing system that enables document production to the KFTC and offers access to documents issued by the KFTC. This electronic system is expected to expedite the KFTC merger review process by eliminating the administrative inefficiencies resulting from the exchange of physical documents during the merger review. One potential downside of this system, however, is that it provides for constructive notice: Documents uploaded to the system by the KFTC will be deemed served if the recipients do not acknowledge receipt within the designated period (14 days for KFTC decisions and 7 days for other documents).

C. Streamlined Mandatory Disclosure System

The amended statute removes the provision requiring non-listed companies to disclose changes in executive positions. In addition, it allows the KFTC to waive civil fines for minor disclosure violations after considering any subsequent remedial conduct by the party in violation and the substance and degree of the violation. This change is expected to ease the disclosure burden on companies, allowing both businesses and the public to focus on essential disclosures while improving the overall efficiency of the disclosure system.

D. Increased Threshold for Exemption From Market Dominance Presumption

The threshold for being exempt from a market dominance presumption will increase from KRW 4 billion to KRW 8 billion (approx. USD 6 million) to account for economic growth and changes following the introduction of the threshold in 2007. This adjustment is expected to ease regulatory burdens on small and innovative businesses in particular.

By Yulchon, Korea, a Transatlantic Law International Affiliated Firm.

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