KFTC Approves NS Shopping's Acquisition of Homeplus Express Amid Restructuring

KFTC headquarters in Sejong City, South Korea, October 13, 2023. [Photo by Yoo Dae-gil, dbeorlf123@ajunews.com]

The Korea Fair Trade Commission (KFTC) has approved NS Shopping's acquisition of Homeplus Express, determining that the deal is unlikely to significantly restrict market competition amid ongoing corporate restructuring.
On June 12, the KFTC announced that NS Shopping, a subsidiary of Harim Group, agreed to acquire the operations of Homeplus Express for 1.206 trillion won. The companies signed a sales transfer agreement last month, which included NS Shopping's commitment to repay part of Homeplus Express's debts.
Given that Homeplus is currently undergoing a restructuring process, the KFTC expedited its review.
Harim Group is a vertically integrated food and agriculture conglomerate involved in grain procurement, feed production, livestock, slaughtering, processing, and distribution. In addition to its core chicken products, it also produces and sells pork, duck, processed meats, ready-to-eat meals, and pet food. Through NS Shopping, the group has also entered the TV home shopping and e-commerce markets.
Homeplus Express operates as a corporate supermarket (SSM) under the Distribution Industry Development Act. While SSMs typically derive 93% of their revenue from food sales, they are facing significant competitive pressure from the growing online retail sector.
The KFTC found that the merger would result in 11 vertical integrations and two mixed integrations. Vertical integrations involve the combination of Harim's production and manufacturing categories with Homeplus Express's distribution network. Mixed integrations refer to the combination of NS Shopping's TV home shopping and online mall distribution networks with Homeplus Express's offline distribution network.
Excluding three vertical integrations related to chicken, the remaining 10 integrations were deemed to have low market share, suggesting minimal risk of restricting competition. In the case of chicken, it was noted that Homeplus Express's market share is lower compared to competing SSMs. The KFTC concluded that it is unlikely for competing poultry distributors to face significant disadvantages in finding sales channels or sourcing chicken from Harim.
The KFTC stated, "In a rapidly restructuring market, we aim to support capable secondary players to recover and grow as competitors against primary players. We will expedite the review of mergers that promote market innovation and support the creation of a competitive market environment."

* This article has been translated by AI.