Wide Reinforcement of Limitations on Total Investment Amount

The Fair Trade Commission is reported to be promoting the enhancement of regulations for conglomerates including reducing exceptions to limitations on total stake investment amounts.

Aside from business circle reaction on the policy, controversy over the new policies has been raised among the ministries concerned.

The above Commission reported to President Roh Moo-hyun today that the improvement plan will be worked out through a common task force consisting of civil as well as government officials in May after gathering conglomerate investment data.

The Chief of the Commission expressed his opinion for enhancing investment limitations by saying: “The total amount of exceptions on aggregate investment amounts exceeds 40% of total investments. This is problematic in that some companies are excluded from regulations on investment limitations only because they have a better financial structure.”

The Commission will write up drafts after discussion on opening shares held by owners and relatives of conglomerates; implementing the right to demand financial information; restricting voting power for the financial companies of conglomerates and introducing the right of separation demand from conglomerates; enacting legal procedures to raise suits for the general public; activating redemption claims in fair trade law; and finally, designating commission officials as judicial police.

The Commission will finish institutional arrangements for improving the conglomerate control system by next year, and then completely restructure the conglomerate policy after evaluating promotion performance for 3 years.

President Roh made a comment on restriction of overall investment amounts by saying: “There are two different opinions, one for further strengthening the structure of the conglomerate system and another for alleviating the problems associated with liberalized investment. Therefore, instead of drawing up an amendment right away, more discussion is needed to deliberately gather diversified opinions.”

The Deputy Prime Minister and Minister of Finance and Economy, Kim Jin-pyo made it known that he is against a part of the commission’s draft policy that the policy must have consistency, and that direct regulations over the industry be eased in order to enhance self-examination of the market.

Eun-Woo Lee Jeong-Hun Kim libra@donga.com jnghn@donga.com