This study evaluates Korea’s competition policy and attempts to shape a future path fit for a new global economic and business environment.
Competition policy has played a significant role in curbing the excessive expansion of Korea’s conglomerates and in alleviating the country’s economic concentrations. The foreign exchange crisis that hit Korea in 1997, however, implied insufficient or a total lack of market discipline toward firms and their CEOs, as well as the ineffectiveness of uniform regulations designed to improve the structure and behavior of conglomerates. The crisis brought about significant changes in Korea’s public policies, laws, industrial organizations including conglomerates, and overall relations between government and businesses. Furthermore, trends such as globalization, the information revolution and the rise of the knowledge industry led to substantial changes in Korea’s market and business environment.
Under the uniform regulations imposed on Korea’s conglomerates was the unrealistic assumption that major firms faced an identical set of problems. These problems had to be addressed given the extent of the Korean economy’s openness and integration into global markets since the 1997 crisis. To adjust to the new environment, Korea’s Fair Competition Act must strengthen its role as a competition policy framework, and the current regulation-based approach toward conglomerates must shift to one based on competition. Through policy interventions that respond to different targets and cases, competition policy must help well-performing firms grow into global players while allowing underperformers to exit the market.
In light of these principles, structural corrective measures based on rigorous standards and procedures must replace the current regulations for conglomerates. Merger regulations must be reinforced to curb the formation or strengthening of hierarchical business structures, which constitute the foundation of inefficient and abusive behavior by big businesses. As ex post corrective measures, the government should consider introducing public orders to separate particular firms from conglomerates or split a firm into two or more smaller entities. Anti-trust authorities must prioritize economic efficiency and consumer welfare rather than economic concentration or fair competition, and focus their efforts on improving market performance by beefing up competition rather than intervening to resolve disputes between private entities. Reinforcing the Fair Trade Commission’s consumer policy-making role is also one of the most pressing tasks to embedding market-based disciplines among conglomerates.
공정거래정책 20년(20 years of competition policy in Korea)
운용성과와 향후 과제(Evaluation and prospects)
|Series Title; No||정책연구시리즈|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < General|
|Holding||한국개발연구원; KDI 국제정책대학원|