[EDITORIALS]Don’t restrict fair investmentsThe controversial sale of Daewoo Heavy Industries & Machinery Ltd., is nearly complete. The Public Fund Oversight Committee on Monday approved Doosan Heavy Industries & Construction Co.’s purchase of a controlling stake in Daewoo. The takeover would make the Doosan Group the 12th largest conglomerate, with heavy industries as its major business.
But there is one barrier left that Doosan will have to breach before taking over Daewoo Heavy Industries. The Fair Trade Commission is investigating whether the takeover violates the 25 percent cap on large conglomerates’ investment in other companies.
If the antitrust agency concludes Doosan violated the regulation, the agency could impose a fine and order it to sell the stake in Daewoo. The investigation will be completed next month.
If the sale of the troubled company is cancelled then the recovery of public funds will be delayed. Government money helped support the company. In addition, the value of the company for sale will be lowered, and Doosan will suffer a big loss.
This clearly shows how the 25 percent cap on conglomerates’ investment in other companies can restrict business activities. A merger or acquisition is an investment activity made through elaborate estimations and rigorous decision-making procedures. Doosan has decided to take over Daewoo Heavy Industries through legal procedures and has obtained approval from the Public Fund Oversight Committee, which is a government agency.
Now, the Fair Trade Commission says it will examine the takeover in light of the restriction on large conglomerates’ investment in other firms. Of course, the agency could conclude that it’s all right after the examination. But there is a possibility that it could not. What will happen if the agency reaches a conclusion that the takeover is against the regulation on large conglomerates’ investment in other companies? Will the agency cancel the sale, reversing a company’s judgment on investment and the Public Fund Oversight Committee’s decision?
The Fair Trade Commission has repeatedly said that the restriction on large conglomerates’ investments in other firms would never obstruct companies’ fair investment activities. But in realty, this does not ring true.
The government and the ruling party always say they would make the country good for business activities. They need to show some effort.