Fair Trade Commission Nominee: "Loopholes in Circular Shareholding Regulations...Will Devise Measures to Prevent Circumvention" (Comprehensive)

Regulatory Loopholes in Circular Shareholding:
Joo Byungki Vows Measures Against Overseas Circumvention
Franchise Violence Spurs Call for Legal Mechanisms
to Strengthen Negotiating Power of Franchisees
Tougher Sanctions Needed for Inte

Joo Byungki, Candidate for Chairman of the Fair Trade Commission. Photo by Yonhap News Agency

On September 5, Joo Byungki, the nominee for Chairman of the Fair Trade Commission, stated that there are loopholes in the regulations on circular shareholding among large business groups and expressed his intention to devise measures to prevent circumvention using overseas companies. Regarding the recent stabbing incident at a franchise pizza restaurant in Gwanak-gu, he also pledged to establish legal mechanisms that would allow franchisees to have bargaining power with headquarters.

At the National Assembly confirmation hearing that morning, Joo said, "Strict sanctions are necessary for internal transactions, private interests, and the expansion of control through treasury shares within business groups," adding, "The severity of the sanctions should be sufficient to exceed the profits gained from such acts."

He referred to Korea Zinc’s purchase of domestic affiliate shares through SMC, an affiliate established in Australia, during its management rights defense against Young Poong Group and MBK Partners, stating, "It appears there are loopholes in the laws related to circular and cross-shareholding." He further commented, "I believe we need to devise measures to prevent circumvention using overseas companies."

Regarding suspicions about construction work at the presidential residence during the Yoon Suk Yeol administration, he answered, "I will look into it." Democratic Party lawmaker Park Chan-dae asked whether Hyundai Engineering & Construction should be prosecuted for offering a third-party bribe under Article 130 of the Criminal Act, given allegations that the company was promised a contract worth about 80 billion won for a new state guesthouse in return for building the presidential residence. Joo responded, "I am not sure if this is a matter for the Fair Trade Commission Chairman to answer, but to my knowledge, that is the case."

He added, "I wonder if public procurement projects have become a marketplace for deals between those in power and large conglomerates." When Park pointed out the need for a full investigation into public procurement projects under the Yoon Suk Yeol administration, Joo replied, "I will examine it thoroughly."

Regarding criticism that Hyosung Group repeatedly submitted false information related to large business groups but only received warnings each time, he said, "Of course, aggravated punishment is necessary," adding, "I believe much more significant measures should have been taken instead of mere warnings."

In response to Democratic Party lawmaker Kim Hyun-jung’s inquiry about allegations of illicit succession and unfair business allocation involving Goobne Chicken, reportedly owned by the family of former Presidential Office Chief of Political Affairs Hong Cheol-ho, Joo said, "If appointed, I will look into it closely."

Officials from the Democratic Party's Committee for Protecting the People’s Livelihood, the National Franchisee Association, and the People's Solidarity for Participatory Democracy are holding a rally on the steps in front of the National Assembly main building on the 17th, urging the reduction of delivery app fees and the enactment of the Online Platform Act. Photo by Kim Hyunmin

Regarding the push for platform legislation, Joo took a cautious stance. He explained, "Trade negotiations are such a critical issue that, for now, it is difficult to aggressively pursue platform laws related to monopoly regulation," and added, "The U.S. government is taking a hardline stance on platform legislation, and the head of the U.S. Federal Trade Commission (FTC) recently visited Korea and explicitly stated that preemptive regulation should not be implemented."

However, he expressed his commitment to promoting legislation addressing the power imbalance between platforms and partner businesses. He said, "The issue of power imbalance, which is unique to Korea, is rapidly expanding into the platform economy," and added, "Independently of trade issues, I will cooperate with the National Assembly to amend the law."

This statement highlights that changes in the global trade environment and discussions on platform regulation are inseparable. He remarked, "Korea is late in pushing for the Online Platform Act," and expressed regret, saying, "If it had been introduced about three years ago, when discussions were advancing rapidly, trade negotiations might have been less challenging."

In response to questions about the franchise pizza restaurant stabbing incident in Gwanak-gu, Seoul, he stated, "There must be legal mechanisms to ensure franchisees have balanced bargaining power with headquarters." He emphasized, "The National Assembly and the Fair Trade Commission will work together to establish such mechanisms."

Addressing criticism from People Power Party lawmakers Choo Kyung-ho and Yoo Young-ha regarding habitual tax delinquency, he stated, "The delayed payments were mistakes," and apologized, saying, "I am sorry to the public." Joo explained, "Whenever a delay was identified, I paid immediately," and added, "I will be much more careful in the future to prevent any further delays."

Representative Choo pointed out, "There have been 15 instances of asset seizures due to unpaid taxes or fines, and 14 seizures of vehicles and other assets. Delinquency in comprehensive income tax and property tax has continued, and you missed the payment deadline for comprehensive income tax five times over seven years." Representative Yoo also criticized, "It is inappropriate for someone who does not fulfill the basic civic duty of paying taxes to hold public office."

In response, Joo explained, "I have always tried to live by the principle of fulfilling the law and my civic duties," and clarified, "I have never intentionally tried to evade my tax obligations."

Regarding the fee cap system currently under discussion in the National Assembly, he said, "I view it positively." Addressing concerns that the introduction of a fee cap could lead to side effects, he stated, "Even if a fee cap is introduced, it will be ineffective unless there are measures to prevent costs from being passed on to consumers or delivery workers," and emphasized, "The scope of fees should include advertising expenses but not delivery charges."

Regarding the consent decree applications by Baemin (Baedal Minjok) and Coupang Eats, both under investigation for various abuses of power, he said, "If a company with significant market dominance commits a serious unfair act, it is preferable to proceed with a formal review process rather than a consent decree."

On allegations that the headquarters of Myeongnyun Jinsa Galbi encouraged franchisees to take out high-interest loans, he said, "If I find any illegalities after confirming the facts, I will take strict action." Regarding the situation with Homeplus, acquired by MBK Partners, he stated, "I will work with the National Assembly to devise measures to prevent harm to small suppliers or consumers."