Foreigners may be put on FTC watchlist

Fair Trade Commission (FTC) Chairwoman Joh Sung-wook, third from right, is accompanied by corporate executives during a ceremony marking the opening of the in-house cafeteria business of conglomerates to the public at LG Science Park in Seoul, April 5. Korea Times file

By Yi Whan-woo

Fair Trade Commission (FTC) Chairwoman Joh Sung-wook stressed that the commission will not rule out adding foreigners onto its chaebol “watch list,” following a controversial decision not to name Korean-American Kim Bom-suk, the founder and controlling shareholder of e-commerce giant Coupang, on its updated list, April 29.

Introduced in 1987, the watch list was mainly aimed at banning family members of big business conglomerates known as “chaebol” from awarding business contracts to affiliated companies and to prevent owners from using cross-shareholding and other practices to control their corporate empires despite holding a tiny stake.

“There should be an overhaul of the regulatory framework that can be more effectively implemented to control large business groups without discriminating against entrepreneurs due to their citizenship,” Joh said during a press conference at Government Complex Sejong, Tuesday.

This was the FTC chief's first meeting with reporters after it added Coupang to its new watch list, but not Kim due to his nationality.

The measure drew criticism that the FTC lacks consistency and fairness in filing the list, considering that Korean entrepreneurs who were under a similar circumstance to Kim were targeted by the commission.

The FTC on April 29 acknowledged that Kim, who is entitled to exercise 76.7 percent of the voting rights in Coupang, virtually controls the firm.

It still explained Kim had to be left off the list considering the fact that no foreign owner of a company has been added to the corporate watch list so far.

She said the commission will carry out a feasibility study on changing that rule as soon as possible.

The Coupang founder and his family will avoid relevant regulations as well as accountability for any violations or scrutiny of his personal financial deals, while Coupang faces stricter filing regulations. They include disclosing detailed information on management and business activities.

“We will take into account fairness, consistency and sustainability in the overhaul of regulations,” Cho said. “We will not rule out adding foreigners if they substantially control their respective firms as seen from the Coupang case.”

A Coupang official, who asked not be named, said, Wednesday, “The firm is not in a position to speak about what the FTC does considering the commission's supervisory and regulatory nature.”

During the press conference, the FTC said it also will go over which family members of a corporate chief should be included on the watch list.

“Our envisioned feasibility study will include how to revise the extent of the targeted family members in relation to today's business norms,” an FTC official said.

Asked about whether IT giants that initially began as startups should be included on the watch list, Joh said they will be subject to the same regulations as chaebol.

Another issue brought up at the press conference was the FTC's approval of Apple Korea's remedial action after the firm was accused of forcing the country's three wireless carriers ― KT, SK Telecom and LG Uplus ― to pay advertisement and warranty expenses.

Instead of imposing a penalty, the FTC in February authorized Apple Korea's plan to correct its anti-competitive practices and also to set aside 100 billion won ($88.8 million) for projects benefiting consumers and small- and medium-sized companies (SMEs).

“Such a remedial action can be a useful option as long as it helps consumers and other affected groups,” Joh said.