'No OECD country does this': FTC's big business scorecard raises questions
Parliamentary researchers warn that no major Organisation for Economic Co-operation and Development (OECD) country grades corporate groups as Korea’s antitrust regulator plans to do.
Ju Biung-ghi, head of the Fair Trade Commission, speaks at the Sejong government complex on Sept. 21.NEWS1
Korea’s antitrust watchdog wants to score the country’s biggest business groups on how “sound” they are. The problem: Parliamentary researchers say no major Organisation for Economic Co-operation and Development (OECD) country does anything quite like it.
The Fair Trade Commission (FTC) plans to develop the index by the end of this year to assess the ownership structures, governance and internal transactions of 102 large business groups with assets of at least 5 trillion won ($3.7 billion).
The index would combine publicly available information, such as the controlling family’s involvement in management and internal ownership ratios, to provide an at-a-glance assessment of how “sound” each business group is.
The FTC commissioned a research project in May on how to develop and use the index.
“The research project is scheduled to be completed on Dec. 8,” an FTC official said.
The proposal was put under scrutiny after the FTC’s research plan was referred to the National Assembly Research Service for a review of whether the system should be introduced, at the request of Rep. Choi Eun-seok of the main opposition People Power Party. The verdict: proceed with caution.
“We found no cases among major OECD countries in which authorities assess the governance of business groups and publish rankings or grades for individual companies, or use such assessments as a regulatory standard,” the National Assembly Research Service said in its report. “If the FTC itself sets the weights and assigns a single score or grade, that could be seen as endorsing a particular corporate governance model as the preferred standard.”
The report said the FTC could end up with “considerable discretion” over the evaluation process. It also warned that low scores could be misread as signs of legal violations or financial trouble.
The sign of the Fair Trade Commission at its headquarters in SejongYONHAP
“The current Fair Trade Act does not explicitly authorize the FTC to combine and evaluate individual pieces of information and then calculate and publish soundness scores, grades or rankings for each business group,” the report said. “A clear legal basis should be established before the system is introduced.”
The proposal also drew criticism from a lawmaker.
“It is not appropriate for the government to set evaluation criteria for matters that investors and shareholders should be allowed to judge for themselves,” Rep. Choi said. “This is an attempt to line up companies and pressure them according to political ideology, based on FTC chair Ju Biung-ghi’s distorted view of the market economy and large companies.”
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
