Reform to focus on top 4 chaebol: FTC chief

Fair Trade Commission (FTC) Chairman nominee Kim Sang-jo said he will apply laws more strictly to the nation’s top four conglomerates.

“I think it is crucial to give a consistent message to market players for any policy to be effective. My message is please do not break the law,” said Kim Sang-jo, an economics professor from Hansung University, at a press briefing Thursday.

President Moon Jae-in nominated him as FTC chairman the previous day.

Kim said the anti-trust watchdog will focus on the country’s top four chaebol — Samsung, Hyundai Motor, SK and LG.

“Chaebol reform has two objectives. One is to block concentration of economic power and the other is to improve governance structure. However, past regulations have been ineffective with top conglomerates while they turned out to be too much for smaller businesses,” he said.

The four conglomerates have two thirds of the total assets of the top 30 groups, he said. “It is more effective and sustainable to focus on the four.”

Kim said the domestic economy has lost vitality due to the concentration of economic power on chaebol and their “unhealthy” governance structure.

Nicknamed “chaebol sniper,” the reform activist has dedicated himself to small shareholder activism, calling for structural reform of the country’s conglomerates.

While the nomination drew expectations that chaebol will face tough pressure, Kim stressed that he doesn’t want to dismantle or ruin them.

“I have kept talking about chaebol reform over the past 20 years, but I have never said that they should be demolished,” he said, acknowledging their contribution to the economy and the job market.

“Conglomerates are also valuable assets for the Korean economy. It is important to help them induce change for better development.”

He said the FTC will create a better economic ecosystem by setting up a fair market economic order, which will create more and better jobs.

Regarding the circular shareholdings of conglomerates, he said this was not a crucial issue. In circular shareholding, affiliates hold shares in each other in a circular form, such as affiliate “A” holding shares in “B,” “B” holding shares in “C,” and “C” holding shares in “A.” Chaebol owner families have been using this system to control all affiliates with only a small stake.

“Five years ago, there were 98,000 circular shareholdings in 14 conglomerates. Last year, however, the number decreased to 96 shareholdings in eight groups, and it further fell to 90 in seven groups of late. The situation has changed a lot,” he said.

“I am not saying that it is unnecessary to get rid of the circular shareholding structure. It is just not a priority,” he added.