ID :
36268
Thu, 12/18/2008 - 14:19
Auther :
Shortlink :
https://www.oananews.org//node/36268
The shortlink copeid
Corporate regulator to boost M&A activities next year
SEOUL, Dec. 18 (Yonhap) -- South Korea's corporate regulator said Thursday that it will ease mergers and anti-trust rules in 2009 to fuel business activities in the face of a global economic slump.
The Fair Trade Commission (FTC) said in its report to President Lee Myung-bak
that large conglomerates with assets exceeding 5 trillion won will be allowed to
create a private equity fund (PEF) that can be used to buy other companies.
It also said conglomerates that have switched to a holding company structure will
be allowed to control financial firms, effectively banned in the past.
As part of the easing of restrictions, no punitive actions are to be taken
against companies in specified industries that agree to cut production and
manufacturing infrastructure to cope with the drop in demand. Such measures
technically conflict with the country's anti-trust law.
The measures come after the South Korean government said it will try to maintain
an annual growth of 3 percent in 2009 from around a 3-4 percent level this year.
The 3 percent estimate is higher than forecasts by several think tanks and the
Bank of Korea, which predict that the country's GDP growth will slide into the 2
percent range next year.
Regarding PEFs, the FTC says it will waive for five years a 15 percent ceiling on
the voting rights of non-financial companies acquired by conglomerates. It added
that such companies can be resold with fund investors pocketing the profit.
The watchdog said revisions relating to the management of PEFs and mergers and
acquisitions (M&As) will be forwarded to the National Assembly in March.
In addition, the FTC will allow holding companies to acquire financial firms like
insurers and brokerage houses, but will ban cross-shareholding between their
industrial and financial affiliates.
Holding companies that are mainly centered on manufacturing will still be
prohibited from owning banks.
The change should allow the conglomerates SK Group and CJ Group that have
converted to a holding company arrangement to hold onto their financial
affiliates. Under the current system, the two conglomerates had been required to
sell them off within four years.
Regarding anti-trust regulations, the FTC said companies getting prior approval
will be allowed to cut production and reduce manufacturing capacity for a
designated period of time, although price rigging will remain illegal.
The state regulator, however, made clear that it will tighten monitoring of all
unlawful business activities that threaten fair trade and violate consumer
rights.
It said particular emphasis will be placed on ferreting out contracts and deals
that infringe on the rights of small- and medium- sized enterprises at the
expense of large conglomerates and other practices that restrict market access.
yonngong@yna.co.kr
(END)
The Fair Trade Commission (FTC) said in its report to President Lee Myung-bak
that large conglomerates with assets exceeding 5 trillion won will be allowed to
create a private equity fund (PEF) that can be used to buy other companies.
It also said conglomerates that have switched to a holding company structure will
be allowed to control financial firms, effectively banned in the past.
As part of the easing of restrictions, no punitive actions are to be taken
against companies in specified industries that agree to cut production and
manufacturing infrastructure to cope with the drop in demand. Such measures
technically conflict with the country's anti-trust law.
The measures come after the South Korean government said it will try to maintain
an annual growth of 3 percent in 2009 from around a 3-4 percent level this year.
The 3 percent estimate is higher than forecasts by several think tanks and the
Bank of Korea, which predict that the country's GDP growth will slide into the 2
percent range next year.
Regarding PEFs, the FTC says it will waive for five years a 15 percent ceiling on
the voting rights of non-financial companies acquired by conglomerates. It added
that such companies can be resold with fund investors pocketing the profit.
The watchdog said revisions relating to the management of PEFs and mergers and
acquisitions (M&As) will be forwarded to the National Assembly in March.
In addition, the FTC will allow holding companies to acquire financial firms like
insurers and brokerage houses, but will ban cross-shareholding between their
industrial and financial affiliates.
Holding companies that are mainly centered on manufacturing will still be
prohibited from owning banks.
The change should allow the conglomerates SK Group and CJ Group that have
converted to a holding company arrangement to hold onto their financial
affiliates. Under the current system, the two conglomerates had been required to
sell them off within four years.
Regarding anti-trust regulations, the FTC said companies getting prior approval
will be allowed to cut production and reduce manufacturing capacity for a
designated period of time, although price rigging will remain illegal.
The state regulator, however, made clear that it will tighten monitoring of all
unlawful business activities that threaten fair trade and violate consumer
rights.
It said particular emphasis will be placed on ferreting out contracts and deals
that infringe on the rights of small- and medium- sized enterprises at the
expense of large conglomerates and other practices that restrict market access.
yonngong@yna.co.kr
(END)
