Disposal of Samsung C&T Shares
The Fair Trade Commission (FTC) of Korea began a review of the disposal of five million Samsung C&T shares in accordance with the merger of Samsung C&T and Cheil Industries. The FTC will decide whether or not it will order Samsung C&T to sell off additional shares as early as within this year. To this end, the FTC is preparing a plan to amend the Guideline on the Enforcement of Law to Ban Cross-Shareholdings for Mergers.
According to the FTC and external experts on December 12, the Committee of the Whole of the FTC introduced an amendment to the guideline at the end of last month as a non-disclosure agenda. The Corporate Group Bureau presented three draft proposals on revising the guideline.
If the draft proposals are applied to the merger of Samsung C&T and Cheil Industries, the first proposal will result in the additional sell-off of five million Samsung C&T shares and the second in the additional sell-off of four million Samsung C&T shares. The third is to maintain the current conclusion.
As the FTC announced the guideline in December 2015, the organization applied it to the merger of Samsung C&T and Cheil Industries. In accordance with the FTC’s authoritative interpretation, the Samsung Group addressed cross-shareholding problems that stemmed from the merger by selling off five million Samsung C&T shares held by Samsung SDI.
However, an investigation by a special prosecutor and the court’s first trial of Lee Jae-yong, vice chairman of Samsung Electronics, found that the FTC’s decision was changed by unfair external pressure at the time. The number of shares disposed by Samsung C&T according to the merger dropped from ten million to five million then rose to nine million and finally arrived at five million. The court stated in the decision for the first trial in August that Samsung’s and Cheong Wa Dae’s lobbying the FTC succeeded.
After the first verdict on vice chairman Lee the FTC asked professors and legal experts about whether or not the FTC could overturn the wrong decision in 2015 and heard that the FTC could do that. "We cannot apply the principle of trust protection between the FTC and Samsung because the FTC ruling was distorted by Samsung's illegal activities," a Fair Trade Act specialist said. First of all, the FTC is planning to change the guideline, an arbitrary regulation into an official notice with legal effects.