Establishment of a Non-Financial Credit Bureau Joint Venture

With the amendment of the Credit Information Use and Protection Act, credit information businesses that use non-financial information gathered through sources such as telecommunications, electricity and gas bills, records of online shopping purchases and information from social networking sites are able to obtain a credit bureau license from the Financial Services Commission under the relaxed requirements. Against this backdrop, the three telecommunication companies and two credit rating agencies sought to establish the proposed joint venture (“JV”) to operate a non-financial credit bureau business using telecommunications information. There were several challenges anticipated in the initial stages of establishing the JV as it was necessary to (i) design a transaction structure to avoid the three telecommunication companies’ violation of the regulations on holding companies under the Monopoly Regulation and Fair Trade Act (“MRFTA”), and (ii) decide whether the three telecommunications companies, which virtually monopolize telecommunications information with an oligopoly in markets such as mobile telecommunications, could foreclose the non-financial credit bureau market.

To comply with the regulations on holding companies under the MRFTA, Lee & Ko’s Antitrust and Competition Practice Group successfully devised a corporate governance structure for the JV, and also actively communicated with the Korea Fair Trade Commission (“KFTC”) to confirm that the proposed transaction would not give rise to any concerns regarding the regulations on holding companies.

In the subsequent stages of the merger review process, serious concerns were raised regarding the possibility of the three major telecommunication companies, which monopolize telecommunications information in Korea, foreclosing telecommunications information to other non-financial credit bureau companies outside the JV. However, Lee & Ko’s Antitrust and Competition Practice Group successfully persuaded the KFTC that such concerns are not valid by submitting persuasive legal opinions and evidence, and as a result, the KFTC ultimately granted unconditional approval for the JV.

This case highlights our Antitrust and Competition Practice Group’s ability to secure unconditional approval for the JV and other transactions from the KFTC when there are serious concerns raised regarding the potential restriction of competition. Our meticulous and logical arguments and proactive responses played a crucial role in convincing the KFTC to grant unconditional clearance. Additionally, the comprehensive legal services provided demonstrates our expertise in navigating potential legal challenges throughout the transaction process. The unconditional approval of the JV is expected to contribute to lowering the barriers for financial services to underrepresented groups with limited histories of financial transactions.