Naver set to file suit against FTC
By Lee Min-hyung
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Naver founder Lee Hae-jin
The nation’s largest portal operator has been protesting the Fair Trade Commission (FTC) decision, arguing it should not be subject to stricter antitrust rules because founder Lee Hae-jin does not hold a controlling stake.
On Sunday, the FTC decided to classify Naver as a chaebol whose assets top 5 trillion won ($4.42 billion). The watchdog also designated Lee as the de facto owner, even if he is not the largest shareholder. He holds a 4.3 percent stake as of Monday.
“We are in internal talks to file an administrative suit against the FTC decision,” a Naver official said, declining to comment further. He said nothing specific had been decided.
But the tough decision reflects that the regulatory measure is expected to deal a severe blow to Naver’s brand image as the most successful home-grown internet company.
Naver and Lee will face tougher regulatory hurdles after being classified as a chaebol.
The term, referring to family-owned conglomerates common in Korea, comes with the negative connotations of a top-down and rigid management structure.
“Lee has not been embroiled in any corruption scandals since he founded the company in 1999,” a company official said.
“He also continued to sell company shares even after stepping down from management this March. The move is aimed at making the company more transparent when it has to expand its revenue streams into non-Korean territories.”
Naver plans to make its position more clear in courts against what it calls the regulator’s one-sided decision.
Under the new classification, Lee and his relatives have to make any business activities public. Lee will be liable for any possible mismanagement.
The company said in a recent statement the dispute was a thing of the past. Naver said it expected the government to stop pushing ahead with the old-fashioned regulatory measures and establish more flexible and forward-looking legal steps for Korean companies to grow.
The FTC viewed Lee’s symbolic image as its founder as critical enough for him to engage in making key decisions, even if he was not the largest shareholder.
Naver believes the FTC decision will likely drive down the company’s brand value, because the company is expected to fall victim to the so-called Korea discount from overseas investors.
The phrase refers to Korean companies’ lower stock valuation than their overseas counterparts because of non-transparent corporate management activities.