FTC chief sides with Park on issues

Fair Trade Commission (FTC) Chairman Kim Dong-soo disagreed with the idea of imposing a ban on circular investment yesterday at a forum on economic democratization and fair trade held at the National Assembly.

While Kim talked about pledges regarding the reform of conglomerates by the three main presidential candidates, he mostly agreed with the ideas espoused by Park Geun-hye of the ruling Saenuri Party rather than those put forth by the Democratic United Party’s Moon Jae-in or independent Ahn Cheol-soo.

Park said the current systems of circular investment should be maintained, while Moon argued for change. Ahn said companies should spearhead change “voluntarily.”

“When talking about reforming conglomerates, people tend to focus on ways of changing their ownership structures by banning things like cross-shareholdings,” said Kim. “But such changes would have a limited impact as they only aim to limit the power of the owners.”

He also said there was a strong argument in favor of allowing large conglomerates to flourish as they can be more competitive internationally.

Kim warned that Ahn’s idea of forcing chaebol to spin off their affiliates may prove dangerous.

“This could have serious consequences not only for conglomerates and companies but entire industries,” he said. “Such moves could also infringe on shareholders’ property rights.”

Kim also welcomed Park’s pledge to allow holding companies to control financial subsidiaries for a clear separation of interests.

“This could encourage other large companies to consider remodeling themselves as holding companies,” he said. “And that would help reform their ownership structure.”

According to the FTC, 33 conglomerates controlled a total of 166 financial and insurance companies as of April.

By Lee Sun-min [summerlee@joongang.co.kr]