South Korea’s Fair Trade Commission will consider requiring Samsung Group and Lotte Group to change legal representatives to someone who can actually be accountable for conglomerate management, said its chief Kim Sang-jo.

Local antitrust law requires a corporate to designate a single individual representative who has either controlling stake in the company or actual decision-making power in management to take legal and other responsibilities related to the company.

Despite the importance of the corporate representative, Lee Kun-hee, Samsung Electronics chairman, and Shin Kyuk-ho, Lotte founder and honorary chairman, who are dysfunctional due to their physical disability still hold the title of individual representative for Samsung Group and Lotte Group, each.

Their inability to communicate or express their opinion has sparked the discussion of changing the representatives of the two chaebol groups to someone who actually wields power over the corporate management.

“There is a need to review” the current leadership status in the two groups, FTC Chief Kim said in response to the questioning of bedridden Lee’s management ability from a lawmaker during a state affairs committee meeting held at the National Assembly on Monday.

Kim explained that the antitrust watchdog has kept Lee and Shin as the group’s individual representative given the fact that the change in an individual representative requires change in a business entity subject to FTC regulation, and there is no precedent case of replacing a corporate representative other than in the case of death of the person.

Under Korea’s antitrust guidelines, companies whose assets exceed 5 trillion won ($4.42 billion) have to join the watch list of conglomerates and face more stringent regulations, including limits on inter-affiliate transactions and mandatory disclosures for all units on top of designating an individual as a corporate representative.

The antitrust agency recently included Naver Corp., the country’s internet portal giant in the major conglomerate category and named Lee Hae-jin, founder and former chairman of Naver as the company’s representative individual despite the company’s efforts to prevent the move.

Following the latest change, Naver is now obligated to more disclosure of important business issues related to its 71 units. The company has expressed its discomfort to the decision.

Separately, the FTC will also examine whether Naver has violated antitrust law by offering its mobile payment service only at its online shopping site’s main page, Kim said.

By Seok Min-soo

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