A rash interpretationThe Fair Trade Commission (FTC) corrected its ruling on Samsung Group’s cross-shareholdings made two years ago. In December 2015, the antitrust agency announced a guideline on chaebols’ cross-shareholdings in the wake of reorganizations after changes took place in Samsung following the merger of Samsung C&T and Cheil Industries three months earlier.
The focus was on whether the merger led to a new type of inner stakeholding or strengthened the conglomerate’s existing cross-shareholding structure. At the time, the FTC concluded that the merger “strengthened” the existing cross-shareholding structure and ordered Samsung SDI to dispose of 5 million shares of Samsung C&T. (Samsung SDI owns 9.04 million shares of Samsung C&T.) But in its latest review, the FTC corrected itself to claim that the merger has created a new cross-affiliate network. Under the new interpretation, Samsung SDI must sell the remaining 4.04 million shares it holds in Samsung C&T to complete a severing of the cross connections.
The FTC review came after it was revealed that there was a deal between the Blue House and the group on the sale of Samsung C&T shares. Details came from a special prosecution probe and the first trial on Samsung Electronics Vice Chairman Lee Jae-yong. The Seoul Central District Court in an August ruling concluded that Samsung Group had lobbied for a favorable action in the FTC guideline. The FTC now said there is no problem in its retroactive remedial order as it has not changed any regulations but came to a reinterpretation.
The government can correct a misjudgment. But it is stretching things too far to connect the FTC review in 2015 to Samsung’s alleged lobbying only based on the first trial. There can be new interpretations in the appeals trial or the final Supreme Court ruling. Will it correct itself once again if there is a new court finding? It is no wonder the antitrust agency is losing confidence from the business community. Confidence in public policy takes a long time to build, but can crumble on one misstep.
JoongAng Ilbo, Dec. 23, Page 30