1. Reasons for Amendment
The Amendment modernizes the method of corporate consolidation examination to allow various characteristics of the modern digital economy to be reflected in the corporate consolidation examination process in a suitable manner. It also accounts for recent trends in domestic and offshore corporate consolidation examinations, thereby aiming to expand the institutional groundwork for greater effectiveness in corporate consolidation examinations.
2. Major Provisions
A. Modify temporary examination standards (Part III amended)
1) Prescribe that cases where mixed consolidation is conducted for an online platform operator who provides products and services that do not have supplementation or substitutability, and where the entity being consolidated has provided products and services to an average of at least 5 million people per month in the immediately preceding year, shall be subject to general examination.
2) Prescribe that cases where an existing limited partner (hereinafter “LP”) of a private equity fund (hereinafter “PEF”) participates in a paid-in capital increase of the PEF or acquires equity in another LP shall be subject to temporary examination.
B. Modify market definition standards (Part IV amended)
1) Prescribe standards to allow different groups to be defined as a single market (“multi-sided market”) when a company participating in a corporate consolidation (hereinafter “participating company”) is an enterprise that promotes interaction between the different groups.
2) Prescribe that when a participating company provides a service nominally free of charge, a market may be defined by determining demand substitution based on quality deterioration, etc. rather than price variation.
3) Add an example of innovative market definition.
C. Modify standards for determining restrictions on competition (Part V amended)
1) Prescribe the market share calculation method for cases where a participating company provides a service nominally free of charge and specify that in such cases, it is necessary to analyze the restriction on non-price competition due to quality deterioration, etc.
2) Specify that where a participating company is an online platform operator, it is necessary to consider network effects as an additional factor when analyzing the restrictions on competition.
3) Modify provisions so that the restrictions on competition of mixed consolidation can be analyzed with a focus on tying/bundling.
4) Give various examples of direct evidence for the Fair Trade Commission to consider when determining restrictions on competition.
D. Improve determination standards of efficiency promotion effect (Part VI amended)
1) Improve examples of the efficiency promotion effect that may emerge following corporate consolidation in a digital economy.
2) Specify that an increase in platform users following corporate consolidation may increase benefits to existing users, corporate consolidation may promote the emergence of innovative services, and consolidation of startups may result in a virtuous cycle in which capital invested in the startups is recovered and reinvested.