Chairman Lee Dong-gull of Korea Development Bank. (Photo: KDB)

Resistance is growing over the pace of the Korean Fair Trade Commission (FTC)’s pace when reviewing pending corporate mergers, as the governmental body is vowing to stick to its principles.

“Companies should also actively cope with issues related to competition restriction,” an FTC official said with regard to Korea Development Bank (KDB) Chairman Lee Dong-gull’s call for the FTC to play an active role in carrying out a review of corporate combinations between Korean Air and Asiana Airlines, as well as between Hyundai Heavy Industries and Daewoo Shipbuilding & Marine Engineering (DSME).

In particular, the FTC clarified that the Korean Air, Asiana Airlines merger will be handled in accordance with laws and principles as less than a year has passed since the beginning of the reviewing period.

The FTC’s shipping fines and online platform regulations are also expected to face backlash from related industries.

The corporate combination review of the pending marriage between Korean Air and Asiana Airlines began in January, the FTC said on Sept. 15. The economic analysis will be completed and the FTC will make a ruling by the end of October.

“We are doing our best as a speedy judgment by the FTC is needed to normalize the Korean aviation industry,” Chairman Lee said when asked about the business combination review in question in an online press conference on Sept. 13.

“I would like to ask the FTC to take a lead, but the Korean Air-Asiana combination is an inevitable and essential matter for the Korean aviation industry to secure competitiveness in the global market.”

The FTC refuted this notion, saying, “It is very difficult to reach a conclusion within a year because the agenda has a vast amount of data and materials to go over.”

“If the need for competition restrictions is confirmed, approval must be made even including all measures to resolve the competition restrictions,” an FTC official pointed out.

“In addition, parties concerned need to hammer out an agreement as well. We cannot finish this matter helter-skelter.” In fact, the FTC’s review of a corporate combination of Baemin and Yogiyo also took more than a year. Baemin and Yogiyo are smaller than Korean Air and Asiana Airlines.

“No one is helping us in Korea,” Chairman Lee reiterated, “The airlines and shipbuilders promised not to make huge profits in an unreasonable way through their mergers. In addition, they cannot do that due to fierce competition with those of other countries. So we want the FTC to become more active in handling this matter.”

Currently, Hyundai Heavy Industries and DSME were notified of an interim review report, which is a review report by EU fair competition authorities.

The report expressed grave monopoly concerns about the merger between the two Korean shipbuilders potentially hampering fair competition in the LNG carrier market.

However, Korea Shipbuilding & Offshore Engineering, a shipbuilding arm of Hyundai Heavy Industries Group, has not been able to come up with enough measures to address such monopoly concerns.

Some analysts say the FTC has not yet come up with the results of its review now that it will follow the EU’s decision. However, the FTC did not agree.

This is because the EU’s review report is sent before it contains measures for concerns over competition restrictions, but the FTC’s review report must include all measures.

Only when the companies concerned suggest sufficient measures to resolve monopoly concerns, the FTC can send a review report on this matter.

“Fair competition authorities of each country use similar criteria about the determination of competition restrictions,” an FTC official said. “Depending on how fast and well a company responds to competition authorities, approval may be made quickly or longer.”

Like above-mentioned cases, government ministries and the business community are showing growing complaints about major issues linked to the FTC’s review results.

The FTC announced that it will deal with all issues in accordance with laws and principles.

With respect to freight collusion, a pending issue in the shipping industry, the FTC is embarrassed about shipping companies which do not agree to the FTC’s imposition of fines for freight collusion.

In particular, the FTC has become nonplused as the National Assembly even came up with a revision of the Shipping Act. This is because the FTC has been looking into related matters for three years.