Business Combination Filing

Under the Monopoly Regulation and Fair Trade Act, the forms of a business combination are classified as follows.

▶Merger : Two or more companies are integrated into a single legal entity by a legal act

▶Acquisition of Shares : Acquiring shares above a certain stake to secure controlling influence over the voting rights of another company

▶Interlocking Directorates : An officer of a particular company concurrently holds office as an officer of another company in a competitive relationship

▶Transfer of Business : Acquiring all or part of a company's business to succeed to the status of the business operator

▶Other : Mutual investment, company division and division-merger, establishment of a controlling company, and similar matters

A business combination filing obligation arises where the following standards are met.

Standards based on the total assets or revenue of the companies party to the combination

▶Where companies whose domestic revenue or total assets are 300 billion won or more carry out a combination

▶Where the domestic revenue or total assets of the transaction counterpart are 30 billion won or more

In particular, even in the case of a combination between foreign companies, a domestic filing obligation arises if the above requirements are met.

In this case, the determination is made comprehensively, considering not only the transaction amount but also whether there is substantial controlling influence, the shareholding ratio, the right to compose the board of directors, and similar factors.

Under the Monopoly Regulation and Fair Trade Act, the following types are exempt from the business combination filing obligation.

The prior consultation system for business combination review proceeds through the following procedure.

▶Application Deadline : Submit the consultation application to the Korea Fair Trade Commission at least two weeks before the date of the formal filing

▶Subject of Consultation : Overall issues that require discussion at the pre-filing stage, including the transaction structure of the business combination, whether the simplified review applies, the definition of the market and the standards for judging the competition-restricting nature, and the scope of disclosure of sensitive business information

▶Method of Consultation : May be conducted in writing, in person, or remotely (by video conference), with a record kept by preparing minutes of the prior consultation that both parties sign

Through this system, the applicant can ascertain the direction of the Commission's review in advance and check competition-restriction issues at an early stage to adjust the transaction structure beforehand, thereby minimizing the risk of review delay or non-approval.

The prior consultation system can be actively used in particular in the following situations.

▶Complex business combination transaction structures : combinations that include, beyond a simple merger, a combination of share acquisition, business transfer, corporate division, and similar elements

▶Combinations in new markets or involving digital platforms : combinations in which the market definition is unclear and the assessment of competition restriction is complex

▶Combinations between foreign companies : cases that involve issues such as analysis of the effect on the domestic market, whether a filing is required, and the calculation of the threshold amount

Through prior consultation, a party may obtain an early determination of whether the Fair Trade Commission will apply simplified review, and by discussing competition restriction issues in advance, the party may modify the combination structure or supplement materials beforehand.

In addition, through consultation on the scope and method of disclosing sensitive materials, the filing party's business confidentiality may also be protected.

■Review of whether a filing obligation arises
☐ Type of business combination (share acquisition, concurrent holding of officer positions, asset transfer, business transfer, merger, joint business, and similar)
☐ Whether Articles 12 and 13 of the Monopoly Regulation and Fair Trade Act apply
☐ Whether the combining parties meet the thresholds for asset size, sales, and market share

■Confirmation of the filing period
☐ Share acquisition : within 30 days after the acquisition date
☐ Asset or business transfer : within 30 days after the date the contract is concluded
☐ Merger : within 30 days after the date of the merger agreement
☐ Concurrent holding of officer positions : within 30 days after the date the positions are concurrently held

■Review of whether to use the prior consultation system
☐ Whether to submit the prior consultation application up to two weeks before the formal filing
☐ Consultation on the transaction structure, market definition, and whether simplified review applies is possible

■Preparation of filing documents
☐ Business combination filing form
☐ Copy of the contract relating to the combination
☐ Materials describing the company overview and current business status
☐ Financial statements for the most recent three fiscal years
☐ Analytical materials on market share and competitive structure
☐ Other materials requested by the Fair Trade Commission (transaction structure diagrams, scenarios, internal review reports, and similar)

■Definition of the combination market
☐ Definition of the product market and the geographic market
☐ Securing the basis for the definition (demand substitutability, supply substitutability, the SSNIP test, and similar)
☐ Securing the basis and materials for calculating market share

■Review of eligibility for simplified review
☐ Whether assets and sales are below a certain size
☐ Whether the businesses have a vertical or horizontal relationship
☐ Whether it can be proven that a combination between foreign companies has no domestic effect

■Assessment of competition restriction
☐ Analysis of market share changes and competitive structure in a horizontal combination
☐ Whether foreclosure and blocking effects exist in a vertical combination
☐ Possibility of gathering the opinions of competitors and counterparties
☐ Preparation of measures to resolve competition restriction concerns (corrective measures, intention of conditional approval, and similar)

■Other considerations under the review guidelines
☐ Review of data combination effects in combinations of digital and platform businesses
☐ Review reflecting the possibility of consumer harm and the public interest
☐ Organization of whether foreign approval has been obtained and whether filings have been made with foreign competition authorities

■Confirmation of whether the filing has been received
☐ Confirm the Fair Trade Commission receipt number and the date of acceptance

■Response during the review process
☐ Prepare for requests to supplement materials
☐ Prepare to submit corrective plans if a notice of competition restriction concerns is given

■Confirmation of the approval result
☐ Confirm whether the result is approval, conditional approval, or prohibition
☐ Establish a plan to perform the conditions in the case of conditional approval

■Subsequent management
☐ Submit an implementation plan for performing the conditions
☐ Submit to the Fair Trade Commission the status of performance of corrective measures such as divestiture
☐ Report and confirm completion of performance of the conditions