Naver-Dunamu Merger Clears One Regulatory Hurdle, Faces Antitrust Scrutiny

Regulatory barriers under South Korea’s Act on Reporting and Use of Specific Financial Transaction Information that had stood in the way of a combination between Naver Financial and Dunamu have been eased following a recommendation from the presidential Regulatory Reform Committee. The Korea Fair Trade Commission, however, said it will closely examine whether the deal could create a monopoly.

The lower bar for major shareholders does not remove the final hurdle: an antitrust review of whether the combination would restrict competition.

Edaily reported on July 25 that the Fair Trade Commission views the committee’s recommendation and its merger review as separate matters. The enforcement decree under the Special Financial Transactions Act sets standards for major shareholder eligibility, but does not directly affect the commission’s assessment under antitrust law of monopoly risks and limits on competition.

The Special Financial Transactions Act governs major shareholder qualification, while the Fair Trade Commission reviews whether a business combination would restrict competition, an FTC official said. The agency will closely examine the impact on the relevant market under applicable laws and regulations, the official added.

On July 24, the Regulatory Reform Committee’s growth subcommittee recommended that the Financial Intelligence Unit include an exemption clause in proposed revisions to the enforcement decree under the Special Financial Transactions Act. The original proposal would have uniformly rejected a virtual-asset business report if a major shareholder had a history of violating economic laws, including the Fair Trade Act. The panel called for exceptions after criticism that applying the rule equally to minor violations and corporate joint-penalty provisions was excessive. The change could ease some concerns over Naver’s eligibility as a major shareholder because the company is standing trial on allegations it violated the Fair Trade Act in connection with its real estate information service.

Still, the Fair Trade Commission is focused on the combination of Naver, South Korea’s largest search and platform company, and Dunamu, operator of the country’s biggest virtual-asset exchange. It is concerned that combining Naver’s payment infrastructure, data and user base with Dunamu’s crypto trading service could shut out rivals or limit consumer choice.