Fair Trade Commission Approves LG Uplus and Kakao Mobility Joint Venture Establishment

The competition authorities have approved the establishment of a joint venture between LG Uplus and Kakao Mobility for the electric vehicle (EV) charging business. Considering the industry's maturity, they viewed the EV charging market, which is still a blue ocean, as likely to expand with the entry of new players rather than leading to excessive competition. The judgment was that the emergence of new businesses would bring more services and lower prices, benefiting consumers.

On the 29th, the Korea Fair Trade Commission (KFTC) announced that it approved the corporate merger regarding the establishment of a joint venture operating EV charging stations (CPO) by LG Uplus and Kakao Mobility, judging that the possibility of restricting competition was low.

LG Uplus and Kakao Mobility announced in July last year that they would jointly enter the EV charging business by establishing a joint venture. LG Uplus, which entered this field earlier last year through the EV charging service 'BoltUp,' plans to transfer its charging business to the newly established company, while Kakao Mobility aims to leverage its platform operation know-how to create synergy.

After reviewing whether the joint venture would restrict market competition, the KFTC judged that LG Uplus and Kakao Mobility are unlikely to limit competition in the charging market by using their dominance in the EV charging market and adjacent mobility markets such as taxis and parking.

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The newly established joint venture will enter the market by taking over LG Uplus's charging business, which holds only a 1.1% market share as of July last year. Kakao Mobility's market share was 36.22% based on monthly active users (MAU) as of December last year, but it was not high at 15.72% when measured by the number of brokerage transactions.

Regarding concerns that this could lead to a price war, the KFTC judged that the entry of new players would lead to market expansion rather than destructive competition. Currently, there are a total of 19 companies operating EV charging stations in Korea (based on a market share of 1% or more). Among the top four conglomerates in Korea, three except Samsung have entered the market, and six out of the top ten conglomerates, including Lotte, Hanwha, and GS, have launched EV charging businesses. However, as of the end of last year, the proportion of EVs among the 25,949,201 registered vehicles in Korea was only 2.1% (543,900 vehicles).

Gu Tae-mo, head of the KFTC's Corporate Merger Division, said, "This market is not yet mature but is just beginning to form, and it is difficult for any single business to significantly increase its market share to gain a monopolistic position." He added, "The entry of new players could rather lead to benefits for consumers, such as price reductions." Considering the industry's maturity, the judgment is that new entrants will lead to consumer benefits rather than excessive competition.

On the 28th (local time), visitors are examining Lucid's electric car 'Air' at the 'MWC 2023' exhibition hall held in Barcelona, Spain. Photo by Joint Press Corps

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According to the KFTC, GS and SK are the first and fourth largest players, respectively, with a large market share gap compared to LG Uplus. Both companies mainly focus on construction, giving them an advantage in supplying charging stations centered on apartments. Hyundai Motor and Tesla Korea are also directly operating charging businesses. In the EV charging platform market, a strong competitor called T map Mobility exists. When measured by brokerage transactions, the market share gap between Kakao Mobility and T map Mobility is not large. Naver also provides charging station search and navigation services through Naver Map, making it a potential competitor that could enter the EV charging platform market in the future.

The KFTC stated, "The entry of new players can further promote competition in launching innovative services and price competition." It added, "This could improve the current situation where users experience significant inconvenience due to charger malfunctions and poor management despite a high charger supply rate, and as price competition becomes active, charging fees may also decrease."

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