Fair Trade Commission Approves Hanil Jegwan-Samkwang Can Merger... "Top Market Share but Beverage Companies Have Stronger Negotiation Power"

Combined Domestic Beverage Can Market Share Rises to 41.8% After Merger

No Concerns Over Competition Restrictions Due to Beverage Manufacturers' Restraint and Potential Imports from China

[Sejong=Asia Economy Reporter Joo Sang-don] The Korea Fair Trade Commission (KFTC) has approved the merger between Hanil Jegwan and Samkwang Can. After the merger, the combined market share in the domestic beverage can market will rise to 41.8%, solidifying their position as the market leader. However, the KFTC judged that there is no substantial risk of competition restriction because the bargaining power of beverage manufacturers, who hold the upper hand in negotiations, acts as a restraint.

The KFTC announced on the 11th that it approved Hanil Jegwan’s acquisition of shares in Samkwang Can on the 8th.

Hanil Jegwan acquired 100% of the issued shares of Samkwang Can on October 29 last year and filed a merger notification with the KFTC on November 27 of the same year. Established in 1968, Hanil Jegwan is a metal can manufacturer primarily engaged in the production and sale of beverage cans, food cans, and industrial cans. Samkwang Can was established on October 1 last year as a spin-off from Samkwang Glass’s can business division. Its main business is the manufacture and sale of beverage cans. Due to continuous operating losses in the can business division over recent years, including an operating loss of 9.2 billion KRW last year, the company decided to focus on its core glass business by splitting off and selling the can business division.

As of last year, Hanil Jegwan held a 34% share of the domestic beverage can market, ranking first, while Samkwang Can held 7.8%, ranking fourth. After the merger, the combined market share will increase to 41.8%. Despite the increase in market share, the KFTC found no substantial risk of restricting competition in the relevant market. Even as the top market share holder, the restraint exerted by beverage manufacturers with superior bargaining power, the possibility of switching purchases to competitors, the potential increase in imports from overseas such as China due to tariff reductions, and the presence of substitute products like glass bottles and PET bottles were all considered. Therefore, the KFTC concluded that there is no substantial risk of restricting competition in the domestic beverage can market.

A KFTC official stated, "It is meaningful that a company that had been recording losses due to recent business deterioration is seeking an opportunity for business normalization through the merger and laying the foundation to strengthen its competitiveness in the market." The official added, "By allowing mergers aimed at strengthening capabilities through restructuring, we will foster an environment where corporate competitiveness is enhanced and related markets can be revitalized."

This content was produced with the assistance of AI translation services.