S. Korea OKs merger of 2 leading online market operators

SEOUL, July 5 (Yonhap) -- South Korea's antitrust watchdog said Tuesday that it has decided to allow the nation's two leading online market operators to go ahead with their business consolidation, clearing the way for the emergence of an e-commerce giant here.
In March, Gmarket Inc. and Internet Auction Co., the nation's No. 1 and No. 2 online marketplaces, applied for the merger with the Fair Trade Commission (FTC). The two, both owned by eBay Inc. of the U.S., hold a combined 72 percent of the so-called "open market" through which retailers sell products via online shopping and operators receive transaction commissions.
"There are no concerns that the merger (between the two) would limit competition. We have come to a conclusion to allow their businesses to consolidate without any preconditions," the FTC said in an e-mailed press release.
"As the two have already subsidiary relations, we cannot say that the merger will further increase their market dominance. Regardless of the decision, however, we will keep monitoring market situations and take stern measures against violations of the nation's fair trade law."
The decision comes after the FTC gave the green light to eBay's bid to purchase Gmarket in 2009 despite concerns that it could create a monopolistic player.
At the time, the watchdog said it granted the approval on the belief that it would have a limited impact on fair market competition given the dynamism in the online marketplace.
The combined market share of Gmarket and Auction stood at 86 percent in 2008. eBay entered South Korea's online shopping business by taking over Auction in 2001.
Though their combined market share declined over the past few years, concerns remain in place that such a giant player could hamper fair competition and provide a chance for operators to abuse their power over small-sized retailers in pricing and other business polices.
Competition is expected to get fiercer down the road in the open market as NHN Corp., the nation's largest Internet portal operator, is poised to join the online auction business.
Last year, the size of the domestic open market was estimated at 11.8 trillion won (US$11.1 billion), up from 10 trillion won a year earlier. The growth is driven mostly by the Internet network in South Korea, regarded as the world's most wired country, experts say.
kokobj@yna.co.kr