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Definition of 'relatives' changes as FTC gets out of the way

Published: 10 Aug. 2022, 16:09 Updated: 10 Aug. 2022, 17:33

Yoon Su-hyun , FTC vice chairman, speaks about changing the definition of 'relative' at the government complex in Sejong on Wednesday. [YONHAP]

The definition of a relative will be redefined by the Fair Trade Commission (FTC) for the first time in 36 years as the Yoon Suk-yeol administration makes good on its campaign promise to get out of the way of business.

After the change, relatives will only stretch to cousins, uncles, aunts, nephews and mother, father, sister and brother in-laws. Until the change, second cousins and cousin-in-laws were included.

What constitutes a relative matters when the anti-trust agency investigates related-party transactions.

The FTC announced the planned adjustment Wednesday. It will first collect public opinions on the issue until Sept. 20 before reforming the enforcement decree on the Fair Trade Act this year. This does not require the approval of the National Assembly.

The newly narrowed definition on relatives will be implemented next year. It would be the first change since the relative regulation was introduced in 1986.

Chaebol with total combined assets exceeding 5 trillion won are to report to the FTC every year on their share ownership structures and the relationships between large shareholders.

A list of groups that meet the criteria is published every May.

This information is used to monitor transactions between related parties and efforts to limit competition.

When the change on relatives is implemented, the number of people defined as relatives will fall to 4,515 from 8,938.

"Some have pointed out that the legal requirement of submitting a report on relatives is excessive as the range on relatives is board when compared to public's perception," said Yoon Su-hyun, FTC vice chairman.

In the new list, common-law spouse will be included, but only when the couple has a child.

"Major statutes, including the Framework Act on National Taxes, stipulate common-law spouses as a persons of special relations," Yoon said.

A number of business leaders could be affected by the change as they are in relations defined as common-law marriages.

Foreigners will not be named the head of chaebol under the latest measures.

Coupang was listed as a chaebol last year, but its leader, American citizen Bom Kim, was not designated as the head.

"We have been working on standards for designating foreigners as business group leaders," Yoon said. "However, the trade authorities, including the Ministry of Trade, Industry and Energy, have expressed concerns about trade conflicts."

BY LEE HO-JEONG [[email protected]]