[Editorial] The Fair Trade Act, More Grip on Businesses?

The Fair Trade Commission announced legislation on a revised fair trade act beforehand, including the reduction of decision-making rights of financial insurers, some supplementations of its current policy limiting the amount of investment money, and the resumption of its authority of tracking accounts. It has many controversial provisions which will trigger more and more hostile M&A (Merger and Acquisition) activities by foreign investors and weaken domestic conglomerates’ investments. Currently, foreign investors share about half of the stocks of the top 10 domestic companies’ affiliates listed in the stock exchange. Given the latest takeover bids to SK Corp., hostile M&A attempts with foreign capital are like to continue. At this critical juncture, this movement to reduce the decision-making rights of domestic major financial insurers from 30 to 12 percent is equivalent to turning over the management of those companies to foreign investors eagerly.

According to the Federation of the Korean Industries (FKI), over the past three years, nine among 13 domestic conglomerates have had to give up their investment plan due to the government policy limiting the amount of investment money. The total amount is 2,200 billion won. Under such circumstances, the Fair Trade Commission has been renouncing the fundamental reform toward this problematic policy, citing its empty rhetoric that this policy does not hurt investment at all.

Before criticizing domestic conglomerates for sticking to the acquisition of shares of their affiliates, the Fair Trade Commission must reflect whether the commission itself has contributed to those problems. It is really hard for our industries to be fully engaged in investment when witnessing our domestic firms, the fruit of our blood and sweat, handed over to foreigners. Only few companies will be willing to pour their money into domestic market and not into overseas’, where lots of interference outside the legal system as well as the government’s excessive regulation are rampant.

If its stated intention is job creation by stimulating investment, the government should refrain from shaking up the management. Before coming up with several ineffective deregulation measures, it should reform its overall policy toward businesses threatening and harassing them.