Fair Trade Chief: "Temporary Special Law for Easing Separation of Industrial and Financial Capital... Fundamentals Must Not Be Undermined"

On November 25, Korea Fair Trade Commission Chairman Joo Byunggi reiterated a cautious stance regarding the ongoing government discussions on easing the separation of industrial and financial capital regulations, stating, "While I am not insisting on strictly maintaining the principle, we must not undermine the foundation." He also noted that even without relaxing the separation of industrial and financial capital, it is possible to stimulate investment in strategic industries by easing other regulations.

During his appearance on MBC Radio's "Kim Jongbae's Focus," Chairman Joo said, "The concentration of economic power in our economy and the distorted incentives within business groups are hindering major companies from focusing on incentives that strengthen technological innovation and competitiveness." He added, "Through the principle of separation between industrial and financial capital, we must manage the risks of conglomerates turning financial institutions into private coffers, the concentration of economic power among large corporations, and the expansion of control by owner families, so that these issues do not worsen."

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When asked by the host about ways to partially ease regulations without undermining the foundation, Chairman Joo replied, "There is the corporate venture capital (CVC) system introduced during the Moon Jae-in administration, and even without relaxing the separation of industrial and financial capital, we can promote investment in strategic industries by easing other regulations." Regarding when the inter-ministerial discussions on the separation of industrial and financial capital might reach a conclusion, he said, "It's difficult to say exactly when an announcement will be made, but active consultations are underway between ministries," and emphasized, "What matters is not just deregulation, but the revitalization of advanced strategic industries."

Regarding the amendment to the Fair Trade Act proposed by the Democratic Party to ease the separation of industrial and financial capital, Chairman Joo said, "There is no need to amend the general Fair Trade Act," and added, "If some regulations are making it difficult for companies to raise their own funds, a temporary special law, such as a special law for semiconductors, may be necessary." Previously, the Democratic Party had proposed an amendment to the Fair Trade Act that would allow a holding company's second-tier subsidiaries to establish special purpose companies (SPCs) to invest in advanced strategic industries.

In response to President Lee Jaemyung's directive regarding collusion in the context of high inflation, Chairman Joo emphasized, "The Fair Trade Commission must thoroughly address collusion in raw materials, as it has a broad impact on consumer prices." Regarding speculation that the collusion investigation may expand to the confectionery, beverage, and dairy sectors, he said, "It is important for the Fair Trade Commission to focus on raw materials," and explained, "We have determined, based on investigation results, that there was collusion among companies regarding sugar and pork, so we have sent an examination report and will proceed with deliberation after hearing industry opinions." He also noted, "A dedicated team has been formed to investigate allegations of price collusion in the flour sector."

Regarding measures to stabilize subcontract payments to ensure they are made on time and at appropriate amounts, Chairman Joo stated, "We will establish protective measures for subcontractors by strengthening the payment guarantee system, implementing direct payment by ordering parties, and mandating the use of electronic payment systems." Concerning the plan submitted to the National Assembly to increase personnel by 167, he said, "Most of the increase will be allocated to areas related to public welfare, such as establishing new offices in Gyeonggi and Incheon," and added, "This will enable us to respond to unfair practices more quickly, promptly, and efficiently."

Chairman Joo identified improving corporate governance as a key priority during his term. He stated, "Although the Korean economy has reached the level of an advanced country, there is still a considerable degree of backwardness," and emphasized, "It is necessary to resolve the extremely opaque governance structure in which owner families of conglomerate business groups control many companies with only small shareholdings." He also stressed, "Unfair practices in subcontracting relationships must be rectified quickly so that small and medium-sized enterprises can innovate," and added, "Resolving issues such as technology theft is essential for creating a healthy market economy ecosystem."

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