Fair Trade Commission Approves Emart and eBay Korea Merger... "No Competition Restriction Expected"

[Sejong=Asia Economy Reporter Kwon Haeyoung] The Korea Fair Trade Commission (KFTC) has approved Shinsegae Group's Emart's acquisition of an 80% stake in eBay Korea.

On the 29th, the KFTC stated, "We have approved the merger as we judged that Emart's acquisition of eBay Korea's shares poses little concern regarding competition restrictions in the related market."

Emart signed a contract to acquire 80.01% of eBay Korea's shares from the US eBay headquarters for 3.4404 trillion KRW and reported the corporate merger to the KFTC in July.

The KFTC first examined the horizontal merger in the online shopping market and determined that the risk of competition restriction is low.

The domestic online shopping market is worth 161 trillion KRW and, unlike overseas markets, is a competitive market without an absolute leader, with Naver Shopping (17%), Coupang (13%), and eBay Korea (12%) sharing the market. Emart's affiliate SSG.COM is a latecomer with a market share of about 3%, so the increase in market share due to this merger is not significant, according to the KFTC's assessment.

Online shopping consumers commonly engage in price comparison and multi-homing (using multiple platforms simultaneously), making switching purchases easy. Competition among shopping malls to attract sellers is active, so the possibility of commission fee increases for sellers is low. The continuous entry of specialized malls with differentiated concepts such as Market Kurly, Ably, and Today's House, as well as the rapid growth of the overseas direct purchase market, were also considered as new competitive pressures in the market.

The KFTC also examined the potential foreclosure effects of the vertical merger, as Emart Mall and other online grocery services can enter eBay's open market categories such as Auction and Gmarket.

The KFTC explained, "Major players in the online grocery market like Coupang Fresh and Market Kurly have successfully operated without entering open markets, and there are many alternative open markets such as Naver Shopping and 11st that have opened grocery categories," indicating that the possibility of blocking sales channels of competing businesses due to this merger is low.

The KFTC also stated that the mixed merger between online and offline shopping markets and the simple payment market has low effects on excluding competitors and raising entry barriers.

The KFTC said, "After the merger, the combined company is likely to enhance its overall business capabilities by utilizing Emart stores nationwide as online logistics centers to strengthen delivery competitiveness in open markets and by integrating and utilizing simple payment services and online/offline user information assets." However, it noted, "The combined market share in the online shopping market is 15% (eBay 12% + SSG.COM 3%), and the offline shopping market share is about 18%. Therefore, concerns about market dominance transfer due to the mixed merger between the two companies are low."

The KFTC rather forecasted that this merger is likely to accelerate competition in areas newly required across online and offline shopping, such as last-mile delivery (service differentiation throughout the process until the product reaches the consumer) and omnichannel (services allowing consumers to search and purchase products across various channels such as online, offline, and mobile).

The KFTC stated, "With this approval, new competition will be activated throughout the distribution market, including strengthening the online competitiveness of traditional offline retailers and revitalizing online-offline linkage," and added, "We will promptly review and process mergers and acquisitions (M&A) for dynamic market restructuring and new competition as long as there are no concerns about competition restrictions."

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