Fair Trade Commission "Overall Easing of Market Concentration in Construction and Manufacturing... Slight Increase in Concentration of Top Companies"

Market Structure Survey in the Optical and Manufacturing Sectors
Top 3 Companies' Market Share Decreases by 0.4 Percentage Points from 41.8% to 41.4%

[Asia Economy Reporter Joo Sang-don] The market concentration in the mining and manufacturing sectors is generally easing, but there is a phenomenon where the concentration of industries and companies with large shipment volumes is increasing.

On the 19th, the Korea Fair Trade Commission announced the results of the market structure survey on monopoly and oligopoly status in the mining and manufacturing sectors as of the end of 2019 in South Korea.

While the market concentration of individual markets is generally easing, there is a phenomenon where the concentration of industries and companies with large shipment volumes is increasing. The simple average CR3 decreased by 0.4 percentage points from 41.8% in 2018 to 41.4% in 2019. CR3 refers to the sum of the market shares of the top three companies.

The simple average HHI fell from 1304 to 1279. HHI is the sum of the squares of the market shares of all companies participating in a specific market. Markets with an HHI below 1200 are classified as low concentration, those between 1200 and 2500 as medium concentration, and those exceeding 2500 as high concentration. In the long term, both the simple average CR3 and HHI have shown a declining trend.

The weighted average HHI, reflecting industry size, increased from 1720 in 2016 to 1810 in 2019, indicating that concentration is increasing in industries with large shipment volumes and among top market share companies.

The market share of the top 100 companies by shipment volume decreased by 0.4 percentage points from 47% in 2018 to 46.6% in 2019, but the trend over the past five years shows a slight increase. The market share of the top 100 companies was 46.5% in 2015, 46.3% in 2017, and 46.6% in 2019.

The proportion of large business groups within industries is declining, but concentration among top business groups is also evident. In 316 industries where large business groups participate, the shipment volume share of these groups decreased by 0.1 percentage points from 93.6% in 2018 to 93.5% in 2019.

The shipment volume of the top 5 business groups is still 1.7 times that of the 6th to 59th business groups. They are active in an average of 49.4 industries, indicating a high degree of business diversification.

Meanwhile, the number of industries maintaining monopoly and oligopoly structures increased by one from 2017 to 47, but this is analyzed as a similar trend in the long term. Industries maintaining monopoly and oligopoly structures have CR3 values more than twice (41.4→92.1%) and HHI values more than four times (1279→5141) higher than the mining and manufacturing sector averages. Additionally, there are 30 industries with CR3 over 90%, and 22 industries have had no changes in the composition and ranking of monopoly operators over a long period (2007?2019), indicating high concentration and entrenchment.

A Fair Trade Commission official stated, "The analysis results of this market structure survey show that the concentration of industries and companies with large shipment volumes is increasing, and industries with monopoly and oligopoly structures remain robust, necessitating careful analysis and strengthened supervision from a competition policy perspective." He added, "The Fair Trade Commission also plans to conduct additional analysis and evaluation of the overall survey results to analyze factors causing market structure changes and prepare related measures."

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