FTC approves cartel for ready-made concrete companies

(ATTN: UPDATES with more details in paras 4, 9; ADDS with new information, comments
in paras 6, from para 11)
SEOUL, Jan. 21 (Yonhap) -- South Korea's corporate anti-trust regulator on
Thursday agreed to allow small-sized local ready-made concrete companies to form
a limited cartel to engage in joint research and development (R&D) and quality
control.
The measures are aimed at helping the companies cope with the sluggish economy,
which has dented the construction sector, and improve management conditions by
cutting operational costs, the Fair Trade Commission (FTC) said.
It said the cartel will be allowed to operate for two years, with companies
joining forces to manage after sale services and repair or offer compensation for
substandard products.
Ready-made concrete, unset concrete called "remicon," is used in most
construction projects across the country and is moved by specially made trucks.
"Permitting joint quality control and R&D cannot be construed as seriously
limiting fair competition, so the fallout should be minimal, while there are
clear benefits for struggling companies," an official said.
He added that while the country's fair trade law bans the formation of cartels,
there are allowances for such an arrangement if it is to improve competitiveness
of small- and medium-sized enterprises, permit industry-wide restructuring or to
overcome a crisis.
The decision reached by the corporate watchdog marks the first time in 22 years
that it has sanctioned collaboration by companies.
In 1988, authorities allowed local valve companies to work together to
standardize products.
The FTC, however, has rejected a request by the ready-mix concrete companies to
produce a common brand for their cement product, permit joint purchases of raw
materials, and regulate and control cement trucks. The agency claimed such
practices could cause market distortions that would have an adverse affect on
consumers and construction companies.
The announcement comes in response to requests made by 388 small-sized concrete
firms last September. Large operators and those connected with the country's
conglomerates were not among the companies that made the request, nor were
companies in Seoul, Gyeonggi and Gangwon provinces.
A group of concrete firms, however, expressed disappointment that their request
to jointly purchase raw materials has been rejected.
"The limited cartel arrangement does very little to help the situation faced by
small-sized remicon companies," a spokesman for the group said.
He said that the companies will push for revisions to existing laws so
cooperative tie-ups can be formed by small companies, as they do in Japan.
yonngong@yna.co.kr
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