On January 25, 2024, the Korea Fair Trade Commission (KFTC) proposed amendments (Amendments) to the Monopoly Regulation and Fair Trade Act (MRFTA) were approved by the National Assembly of Korea.
The Amendments include (i) merger notification exemptions for transactions deemed not to raise any anticompetitive concerns, (ii) implementation of commitment procedure to enhance the efficiency and effectiveness of merger reviews, and (iii) introduction of an electronic information processing system for the submission, delivery and notification of electronic documents during the KFTC deliberation procedure.
The Amendments now will be sent to be promulgated by the President of Korea. Amendments (i) and (ii) above will be effective from 6 months thereafter and amendment (iii) will be effective from 3 years thereafter. As for amendment (i), however, notification of the business combination subject to merger notification based on the currently existing filing thresholds (prior to amendment (i) taking effect) will be required.
Certain details of the Amendments are set forth as follows:
1. Merger Notification Exemptions (Amendments for MRFTA Articles 9 and 11)
- To reduce the notification burden for companies, transactions involving (i) the establishment of PEF, (ii) mergers/business transfers between parent and affiliate companies, (iii) interlocking directorates that involve less than 1/3 of board members, and (iv) mergers between affiliate companies, where the merged entity's total assets and worldwide turnover are less than KRW30 billion, are exempt from merger notification.
2. Introduction of Commitment Procedure for Merger Control (Amendments for MRFTAArticles13-2and14(2))
- Prior to the Amendments, the KFTC imposes remedies on transactions that may have an anticompetitive effect by determining its own remedies based on the limited information received from the transacting parties, such as information included in the merger filing and unofficially submitted remedies, among others.
- Under the Amendments, the transacting parties, which have considerably more information than the KFTC on relevant markets and the viability of implementing remedies, may officially submit proposed remedies to resolve anticompetitive concerns.
- Most major competition authorities including the US Department of Justice and Federal Trade Commission, the European Commission and the Competition and Markets Authority, have already implemented systems that allow the proposal of remedies by the parties in their merger control regimes. Having been ratified by the National Assembly, the KFTC expects to enhance the consistency of its domestic and foreign merger reviews by allowing the transacting parties to propose officially remedies in transactions raising anticompetitive concerns.
- It is anticipated that the KFTC will notify further the details on the method and procedures for submission.
3. Introduction of Electronic Information ProcessingSystem for Submission and DeliveryofElectronicDocuments(Article98-2of theMRFTA)
- During the KFTC's deliberation procedures, hard copies of documents are exchanged between the KFTC and the party; this is an inconvenience for the party and creates administrative inefficiencies for the KFTC.
- The Amendments will allow the submission, delivery and notification of documents through an electronic information system managed and operated by the KFTC (without requiring an in-person visit to the KFTC).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.