Business Community Set Against Fair Trade Act Revision

The business community is making an all-out effort to block the passage of the pending Fair Trade Act Revision Bill, which is scheduled to be dealt with in a National Assembly plenary session on November 12. Businesses have jointly announced their stance against the bill.

The vice presidents of five major economic organizations, including the Federation of Korean Industries, the Korea Chamber of Commerce and Industry (KCCI), the Korea International Trade Association (KITA), the Korea Federation of Small and Medium Business (KFSB), and the Korea Employers Federation (KEF), held a meeting on the morning of October 20 at the Ritz-Carlton, Seoul in Yeoksam-dong, Kangnam-ku, Seoul. They called for the elimination of the regulation that prohibits large business groups from holding excessive stakes in other companies within the year, retention of the current right to decision making in the financial sector, and the repeal of the reinstatement of the Fair Trade Commission’s authority to demand financial transaction records from businesses.

The vice presidents released a joint statement, “The Fair Trade Commission’s plan to strengthen the regulation on large companies will dampen business investment, which in turn will lead to a deepened recession and tougher job creation.”

They added, “The companies that have many foreign shareholders are exposed to the risk of hostile M&As, thus causing an inability to invest on a long-term basis while concentrating on fending for management rights. The management threat may become a reality if the decision-making rights of the financial sector are gradually decreased.”

They also pointed out, “Corporate ownership and governance depend on companies’ autonomous choices and there is no ‘right answer,’ not even globally, so ‘reverse-discriminative’ regulations on domestic companies based on market capitalization will only lead to reduced national competitiveness.”

The business community sees the National Assembly public hearing on the Fair Trade Act, which is taking place on October 25, as its last chance to reflect its opinion on the revised bill, and is planning to step up its opposition against the revision.

Earlier, on October 19, in a policy debate on Fair Trade Act revision held at the Memorial Library of the 4-19 Revolution in Pyeong-dong, Chongro-gu, Seoul, policy research director Lee Sang-muk criticized, “The Fair Trade Commission is being irresponsible by trying to control the decision making of the financial sector, which is the most basic means of defending management rights.”

Joong-Hyun Park sanjuck@donga.com