The Korean Economic Forum
Israeli Concentration Law’s Implications for the Chaebol Reform of Korea
Sangin Park (Seoul National University)Year 2017Vol. 10No. 3
The paper analyzes the Law for the Promotion of Competition and Reduction of Economic Concentration (“Concentration Law”) of Israel enacted in December 2013, and discusses its applications to the top 10 Chaebols of Korea. In the applications, this paper takes account of differences in the ownership structure of large business groups between these two countries, which reflect different histories of formation of business groups and government regulations. The diferrences are most evident in the regulations on the holding company system and the existence of circular shareholdings (indirect cross-shareholdings). The simulation, which modifies some details of the Concentration Law in the Korean context, indicates a possible trade-off between resolving overdiversification and facilitating conversion into the holding company system. More detailed studies are invited to find out an optimal policy mix to resolve the concentration of economic power by the Korean Chaebols.}