Dongbu, Hyundai, CJ, Daelim, Hite Exempted from Investment Restrictions

The Fair Trade Commission (FTC) announced on Thursday a list of conglomerates whose subsidiaries are subject to investment limits such as an equity investment ceiling and cross sharing limits.

Investment Ban Substantially Eased-

Previously, the equity investment ceiling was applied to “all outfits with total assets of six trillion won or more.” Beginning this month, the regulation will only cover core subsidiaries with two trillion won or more in assets that belong to conglomerates with assets of ten trillion won or more. In addition, the investment limit has extended to 40 percent of subsidiary’s worth from the current 25 percent.

Since the revised enforcement ordinance of the anti-trust law, which states the limit to be confined to “core subsidiaries with assets of two trillion won or more,” has not been approved yet, the FTC will apply the new plan to all outfits with total assets of ten trillion won or more for the time being. Once the approval is made in July, the list of companies under the investment limit will be shortened.

According to the announcement, a total of 11 groups are subject to the investment limit including Samsung, Hyundai-Kia Motor Group, SK, LG, Lotte, GS, Kumho Asiana, Hanjin, Hyundai Heavy Industries, and Doosan. The figure represents a reduction from last year’s 14. With the revision of relevant regulations on July 1, LG, Kumho Asiana, Hanwha, and Doosan will be further excluded from the list.

As the limit is reduced to groups with total assets of ten trillion won or more, Dongbu, Hyundai, CJ, Daelim, and Hite are removed from last year’s list. On the contrary, Hanjin and Hyundai Heavy Industries are included on the list this year because they have failed to meet the requirements that allow some exceptions to the regulation.

Korea Electric Power Corporation (KEPCO), POSCO, KT, and six other groups, with total assets of ten trillion won or more, are qualified to be exceptions. SK will be added to the list of exceptions if it realigns its units under a holding company as it announced the day before.

Samsung Ranks First in Assets for Third Consecutive Year-

The total number of groups and subsidiaries to be subject to regulations that ban cross sharing and guaranteeing subsidiary debt obligation increased from 59 groups and 1,117 companies with total assets of two trillion won or more to 62 and 1,196, respectively.

While Amorepacific, Kyobo Life, Orion, Daewoo Motor Sales, and Hyundai Engineering & Construction were added to the list, Daewoo Engineering & Construction, recently acquired by Kumho Asiana, and JoongAng Ilbo, with reduced assets, were excluded.

Not much shift was witnessed in the ranks in terms of assets. The top five groups have all maintained their ranks since last year with Samsung maintaining its number one ranking for three years in a row, followed by KEPCO, Hyundai-Kia Motor Group, SK, and LG. In the lower half of the top ten, Korea National Housing Corporation came in sixth followed by Lotte, Korea Expressway Corporation, POSCO, and KT.

Among the groups listed outside the top ten, those that have expanded the business through merger and acquisition made the greatest stride. Kumho Asiana which bought Daewoo Engineering & Construction jumped to 13th from 18th, while Wal-mart Korea buyer Shinsegae made it at 21st from 23rd. In addition, LS which purchased Kukje Corporation came 22nd, three spots higher. Eland rose to 32nd, an amazing leap from 53rd, with the hard-won acquisition of Carrefour Korea.

ddr@donga.com