[EDITORIALS]Fair trade panel’s timing is offThe Fair Trade Commission has announced a draft revision to the Fair Trade Act that includes limiting the financial companies of big business groups from exercising voting rights in other companies in the group, limiting the amount of total investment and regulating holding companies more strictly.
Instead of raising objections, we ask whether this is the right time to impose such limits. However good and desirable something may be, if it comes at an unfavorable time, it can cause more harm than good.
Amid a long-lasting economic recession, investment and consumption are stagnant and people suffer from unemployment. Under such circumstances, restricting business activities and strengthening regulations are questionable.
The commission is taking the position that financial companies in business groups should have their voting rights limited, and eventually abolished, when it comes to other companies in the same group. The commission said customers’ money should not be used to bolster the influence of major shareholders.
It is right in principle. But more than half of the shares of many big businesses are held by foreign investors, thus exposing companies to hostile mergers and acquisitions. It means that the management rights of Korea’s representative businesses can be sold to foreign capital at bargain prices. In light of such scenarios, the idea of limiting voting rights is dangerous and unrealistic.
A system that limits the total amount of investment in big business groups has the good intention of preventing unnecessary business expansion, but it has the bad effect of discouraging investment of big businesses. Such limits on investment in big businesses can be found only in South Korea. We should look at the reasons behind such a system and ask whether we should implement it.
It is necessary to watch and inspect shoddy management and illegal activities of big businesses. But strengthening regulations does not solve problems. The market situation and industrial environment have changed.
The commission should adjust to these new circumstances as well. It must approach issues with an eye on the national economy and look at why the Ministry of Finance and Economy objected to its plan.