Antitrust watchdog carefully scrutinizing deal to prevent market monopoly
Shinsegae Co. recently announced it would buy the local operation of U.S. retail giant Wal-Mart, but the merger faces a bumpy road ahead, with the government planning to apply strict conditions to the deal to prevent a market monopoly. Shinsegae, which operates E-Mart, the nation's No. 1 discounter, said Monday it will buy 16 Wal-Mart stores and rename each of them E-Mart.The Fair Trade Commission (FTC), Korea’s antitrust watchdog, said it will take into consideration the market shares of each merged entity on a local level, not just on a national level, before allowing for the consolidation. The FTC said that it made its decision to reflect the fact that customer groups for retailer stores are mainly based in the regions in which the stores are located. Under current regulations, a consolidation resulting in a business entity holding more than 50 percent of the market share is not allowed, while a merger among the top three companies in a market resulting in a combined share of 75 percent or more is also prohibited. If the FTC finds fault with the merger, some of the Wal-Mart stores that Shinsegae have taken over might be prohibited from being turned into E-Mart shops as planned, experts said. Shinsegae's E-Mart operates 79 stores across the nation. Among the 16 Wal-Mart stores, 10-11 are located near current E-Marts, experts said. E-Land Corp., a rival company, took over 32 of the French retailer Carrefour’s discount stores last month, but has not faced similar FTC regulations. The company, which runs Kim's Club discount stores across the nation, said its stores are not big enough to create a market monopoly on a regional level, even with the consolidation with Carrefour. "We have submitted sales figures from the national and local levels to the FTC. We believe that there will be no problem in consolidating the stores," said an E-Land official.
