Netmarble faces tougher antirust rules
Netmarble Games Chairman Bang Joon-hyuk speaks during a press conference at the Sheraton Seoul D-Cube City Hotel, Feb. 6, when the firm announced plans to secure future competitive power. / Courtesy of Netmarble Games
Quasi-chaebol status feared to hinder game developer's innovation
By Jun Ji-hye
The country's leading game developer Netmarble Games has become the subject of tougher scrutiny and regulations by financial authorities as the state-run antitrust overseer has added the firm to a list of quasi-chaebol, or conglomerates, and designated its Chairman Bang Joon-hyuk as its effective owner.
Netmarble is the fourth IT company to be designated as a quasi-chaebol after the largest chat platform operator Kakao, the top portal Naver and game developer Nexon.
The decision made by the Fair Trade Commission (FTC) is raising concerns among those in the IT industry as tougher regulations could put a brake on their ongoing efforts to nurture future businesses to compete with global companies.
Every May, the FTC updates and announces a list of quasi-chaebol with assets of more than 5 trillion won ($4.7 billion) and chaebol with assets of more than 10 trillion won. Netmarble's assets were estimated at 5.7 trillion won.
Companies in such lists and their heads are subject to stricter rules, technically aimed at enhancing corporate transparency of conglomerates here, most of which are owned by family members.
Firms in the quasi-chaebol list are obliged to report present conditions of the companies, large-scale internal transactions and the current status of the holding of stocks to the financial authorities.
Owners of such firms take legal responsibility for the business, and should report details of transactions with their family members, a rule designed to prevent them from receiving personal benefits.
“We will perform our obligations sincerely in accordance with the rules,” a Netmarble official said.
But critics claim that the regulations are technically designed to control large companies that grew with manufacturing businesses in the past, noting that it would be improper to apply the same rules to IT firms that attach greater importance to creativity.
Critics also question whether it is appropriate to apply the same standards to manufacturers and IT firms to calculate the amount of their total assets, saying the latter's assets are mostly intangible.
“The tougher regulations could limit IT firms' growth at a time when they need to move quickly and smartly to target the global market,” an official from an IT firm said, asking not to be named.
Controversy was raised last year as well when the FTC added Naver and Nexon to the quasi-chaebol list and designated their respective founders, Lee Hae-jin and Kim Jung-ju, as the firms' owners with overwhelming control.
At the time, Lee visited the FTC in person and claimed that he was not dominating the company.
Naver has demanded the FTC's designation of Lee as the firm's owner be changed, saying he has served as a global investment officer _ unrelated to management _ and stepped down from the company's board. But the commission continued to stick to its decision this year.