A Guide to M&A Processes in South Korea – Merger Filing

Like many other countries, South Korea has its own merger notification & competition review regimes.  This means if your M&A deal involving a Korean company or business meets the merger notification thresholds prescribed in the rules of the Korean competition authority, you need to make a merger filing. And your transaction becomes subject to the authority’s competition review.  Thus, it is imperative that the dealmakers should be fully advised on the Korean merger filing rules for the applicability and for any potential risks.

Korean M&A Regulatory Law and Agency

In Korea, the Monopoly Regulation and Fair Trade Act (MRFTA) regulates the M&A and other similar transactions.  The MRFTA appoints the Korea Fair Trade Commission (KFTC) as the regulatory agency that is in charge of receiving the pre-merger notification and carrying out the competition review.

Types of Merger

Currently, there are 5 types of merger which trigger a merger filing obligation toward the KFTC.

  1. Share Acquisition

    • Acquisition of 20%  (15 % if the target company is publicly listed) or more of the total issued and outstanding voting shares of  the target company; or
    • Becoming the largest shareholder of the target company with the acquisition of any share by a company holding 20% (15 % if the target company is publicly listed) or more of the total issued and outstanding voting shares

  2. Interlocking Directorate

  3. Merger

  4. Business or Assets Transfer
    • Acquisition of all business at issue; or
    • Acquisition of a portion of the business, provided that, the business purchase price should be either 5 billion won or more or 10% or more the total assets of the transferring company’s financial statement at the end of the most recent fiscal year.

  5. Formation of a New Company (a Joint Venture)

    Participating in the formation of a new company and becoming the largest investor thereof.

Small Sized Companies Are Not Required to Make a Filing

Corporate Sizes Test: 300/30 Billion KRW

It is notable that the KFTC doesn’t impose this merger report obligation on every business entity.  For example, even if you acquire more than 20% of a Korean company, you don’t need to make a filing with the KFTC unless you and the other party satisfy the following thresholds:

  • The total value of assets or sales of any party to the transaction exceeds 300 billion won according to the company’s financial statement at the end of the most recent fiscal year; and
  • The total value of assets or sales of the counterparty to the transaction exceeds 30 billion won according to the company’s financial statement at the end of the most recent fiscal year. 

Domestic Sales Test: When a Foreign Party Involved

Also, there is a special threshold that applies when the merger transaction involves a foreign company. 

If (i) both parties to the transaction are foreign companies or (ii) a non-reporting party to the transaction is a foreign company, there will be no obligation to report unless each foreign party’s value of sales in Korea is 30 billion won or more according to its most recent fiscal year’s financial statement.   

Timing of Filing: Pre-Merger or Post-Merger?

The Korean merger filing rules have both a pre-merger filing and post-merger filing systems.  In principle, the party is just fine to file a report after the transaction is complete.  The report must be filed within 30 days after the finalization of the merger.

However, if the total value of assets or sales of any party to the transaction is 2 trillion won or more, the party must do a pre-merger filing.


If a party to the transaction fails to make a merger filing in violation of the law, the company shall be punished by an administrative fine not exceeding 100 million won.

Competition Review

When a merger filing is duly filed with the KFTC, the KFTC initiates the internal review of the deal at issue.  As addressed in the above, the main purpose of this review is whether the transaction restraint the competition in a specific market.  

The KFTC is required to complete the review within 30 days, which can be extended for another 90 days.

Corrective Measures

If the KFTC finds any anti-competitive nature of the transaction, it may render any of the following corrective measures against the party:

  • Cessation of the Relevant Transaction
  • Disposal of All or Some of Shares
  • Resignation of directors
  • Transfer of Business
  • Cancelation of Debt Guarantees
  • Publication of the Fact that the Party Was Ordered to Follow Corrective Measures;
  • Restrictions on the Business Method or Business Scope to Prevent the Adverse Results of Competition Restraints
  • Any Other Necessary Measures

There have been many cases where the KFTC rendered a corrective measure in the international M&A deals.  For example, in 2018, in a deal between Linde AG and Praxair Inc, two international gas giants, where Linde acquired shares of Praxair, the KFTC ordered, among others, either Linde or Praxair to sell all of its assets related to the certain business in the Korean market. 

KFTC’s Internal Rules and Guidelines on Merger Regulation

The KFTC has implemented many internal rules and guidelines on the guideline for a pre-merger filing.  You can find it here.


M&A is an effective measure for a company to increase its competitiveness and expand business opportunities in new geographies.  However, each country has its own regulatory regime concerning a cross-border M&A.  We have addressed the issue of a merger filing rule of Korea in this article.  However, that is just a part of the myriad of various legal issues.  It is always recommended for any entrepreneurs to work with a Korean M&A lawyer who can provide guidance to the Korean M&A and competition laws.

For further information, please contact us by clicking here.

Because of the generality of this update, the information provided herein may or may not reflect the most current legal development at the time of view, nor is it applicable in all situations nor should be acted upon without specific legal advice based on particular situations. 

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