FTC approves Emart acquisition of eBay Korea

Shinsegae Group, which runs Emart, and eBay logos [NEWS1]

The Fair Trade Commission (FTC) approved Emart’s share acquisition of eBay Korea on Friday.

The antitrust body said it gave the green light for the deal because it “concluded [the acquisition] will not limit competition in the online shopping or related markets.”

The approval was announced four months after Emart said it will acquire 80 percent of eBay Korea shares for 3.44 trillion won ($2.9 billion).

Emart runs offline marts as well as e-commerce site SSG.com.

eBay Korea runs e-commerce sites Gmarket, Auction and G9.

The FTC said it categorized Emart’s business into five different models: Online shopping, open market, online grocery shopping, simple payment and offline shopping.

In open market, individual sellers sell products on the platform and are charged a commission.

“We concluded that concerns for limiting competition in all these categories [of business] are low,” said the FTC in a statement. It added that there isn’t yet a dominant online shopping player in the domestic market.

In the 161-trillion-won online shopping market in Korea, Naver Shopping leads with a 17 percent market share, followed by Coupang with 13 percent, eBay Korea with 12 percent and 11st with 7 percent.

In the United States, Amazon leads the market with 47 percent, and in China, Alibaba leads with 56 percent.

“As a latecomer, SSG.com’s market share only stands around 3 percent, so the business combination [with eBay Korea] will not raise its market share significantly,” said FTC.

It added that it will be difficult for the online seller to significantly raise commissions charged to individual sellers, as “competition to attract more sellers to their platform is fierce” amongst e-commerce operators.

The rapid market growth of direct purchases from overseas and specialized online malls are other factors that make the online shopping market heated.

Specialized malls refer to sites like Ohouse and Market Kurly that are focused on a specific theme of products, according to the antitrust body.

Direct overseas purchases made in the first quarter totaled 1.41 trillion won, up 442 percent on year.

“A new competition is expected to arise from this approval, like strengthening online competitiveness by traditional offline retailers and [an effort by the traditional retailers to] actively connect online and offline platforms,” said the FTC in a statement.

Apart from the eBay Korea acquisition, Emart acquired fashion platform W Concept for 265 billion won, the SSG Landers baseball club for 135.2 billion won and additional shares of Starbucks Korea from Starbucks this year. It agreed to sell its headquarters in Seongsu-dong, eastern Seoul, to a consortium led by game developer Krafton for around 1 trillion won.

SSG.com is planned to go public. It chose Mirae Asset Securities and Citigroup Global Markets Korea Securities as the lead underwriters of its IPO.

“Expanding delivery capacity has become necessary,” especially since the capacity of its NEO distribution centers is almost full, said Yoo Seung-woo, an analyst at SK Securities.

BY JIN MIN-JI [jin.minji@joongang.co.kr]