Fair Trade Commission Exaggerated

The business world has accelerated its efforts to stop the revised Law of Fair Trade from passing in the National Assembly, disputing the Fair Trade Commission’s position of maintaining restrictions on a company’s total shareholding. This action is being followed by the business world’s previous efforts suggesting an open forum.

In “Issues of Restrictions on Total Shareholding and Facts,” the Federation of Korean Industries (KFI) said that the Fair Trade Commission’s argument is overly exaggerated because it depends more on outward statistics than the true nature of the restriction itself, and so it could mislead people as to the reality of shrinking investment in companies caused by the restrictions.

This report also points out that since each company calculates total shareholding respectively, the remaining power of issuing the shareholding of all companies is meaningless.

In the case of Samsung, it is now able to issue its shareholding of 7.3 trillion won. However, 5.3 trillion won is for Samsung Electronics, which has proceeded with a large-scale investment in TFT-LCD facilities in Asan, South Chungcheong province. Therefore, this leaves almost no room for other affiliates for additional shareholding.

In addition, the report argues that the current restriction allows some exceptions, but they are only confined to the same business or closely-related business, which narrows down the chances for companies with enough cash to start new ventures. Not only that, it explains that most business sectors in which Korean companies are prevalent are already saturated or will be so in next five to ten years, which means advances to unrelated businesses are highly limited. In this regard, it is no surprise that new investment is shrinking.

“The National Assembly is where every agenda is dealt with through proper discussion. However, now it has shrugged off our suggestion of an open forum on pending economic issues. This is not right, and it is an attempt to make the National Assembly a servant of the administration,” said a KFI insider, arguing back at Fair Trade Commission Chairman Kang Cheol-gyu who ignored the KFI’s suggestion and said it was highly political.

Joong-Hyun Park sanjuck@donga.com