South Korea’s antitrust agency will announce whether Kim Beomseok, Chairman of e-commerce giant Coupang, will be designated as the controlling party of the company in its upcoming “Designation of Business Groups Subject to Disclosure.” Kim, a U.S. citizen, will likely be excluded from the designation as the “same person,” a term that refers to individuals or legal entities effectively controlling a group of businesses, also known as a conglomerate.
Critics have pointed out that excluding Kim from the designation leans towards favoritism, as the purpose of this system is to determine the size of a conglomerate based on the controlling party’s de facto control.
In the 38 years since the antitrust agency began designating business groups subject to disclosure, individuals commonly referred to as “chaebol heads” have primarily been identified as the “same person,” according to the Fair Trade Commission (FTC) on May 14. As of May last year, among the “same persons” of 82 conglomerates, 72 were individuals, and 10 were corporations.
The FTC has not been able to designate U.S.-born Kim as the “same person” for three years since Coupang was recognized as a conglomerate in 2021. This is due to opposition from the Ministry of Foreign Affairs and the Ministry of Trade, which cited potential trade frictions with the U.S. for opposing Kim’s designation as the “same person.”
After consulting with these ministries, the FTC established criteria for determining the “same person” that applies to both Koreans and foreign nationals to address this issue. The cabinet approved the latest revision in the Fair Trade Act on May 7.
Despite these changes, Coupang Inc. is expected to be designated as the “same person” of the conglomerate this year instead of Kim, as the revised Fair Trade Act allows for a domestic company, non-profit corporation, or organization to be designated as the “same person” controlling a conglomerate if it meets several strict requirements.
The FTC has made it possible to avoid designating an individual as the “same person” if the conglomerate’s scope remains the same regardless of whether the “same person” is an individual or legal entity, the individual controlling the conglomerate does not invest in domestic affiliates other than the top company, the individual’s relatives do not invest in or participate in the management of domestic affiliates, and if there are no debt guarantees or loans between the individual controlling the conglomerate, their relatives, and the domestic affiliates.
Kim does not own shares in any Coupang affiliates other than the top company, Coupang Inc.
Some critics argue that the FTC created an exception for Kim, who has substantial control over Coupang, to be exempt from the “same person” designation. While the “same person” designation has been criticized as an outdated regulation, critics are concerned that this makeshift solution sets a bad precedent by giving preferential treatment rather than making fundamental improvements.
The business sector has been calling for abolishing the “same person” designation system to reflect changes in the business environment. In a proposal submitted to the government last year, the Korea Chamber of Commerce and Industry called the system a “Galapagos regulation” unique to Korea, which sanctions companies solely based on size.
