Four South Korean conglomerates - Korea Investment Holdings, KT&G, Harim and KCC - newly joined the country’s large business club this year after each group’s total assets have increased to exceed 10 trillion won ($8.82 billion), according to the nation’s antitrust agency.

Following the upgrade, the four large conglomerates are put on the antitrust agency’s watch list, meaning that they will be subject to tougher antitrust regulations, such as prohibition of cross shareholding ties among affiliates, new circular equity investment, inter-affiliate debt guarantee and stricter disclosure rules under the Fair Trade Act. Financial and insurance units of these business groups will be allowed to exercise voting rights only in a restricted manner.

The Fair Trade Commission (FTC) announced Monday a total of 31 local business groups with over 10 trillion won in total assets as of the end of last year were designated as large conglomerates that are automatically included in its watch list for this year.

The number was up from 28 last year, as the FTC added the four companies to the list while removing one. The FTC raised the bar for large business groups last September, doubling the asset criteria from 5 trillion to 10 trillion won. As a result, Hyundai Group that has sold off a number of lucrative business units in a massive restructuring program last year was dropped out of the list, while KT&G, Korea Investment Holdings, Harim and KCC newly joined the list as their assets increased to meet the criteria.

The antitrust watchdog agency said that KT&G and Harim had its assets rise due to their real estate purchases and financial investments while Korea Investment Holdings and KCC saw growing dividend income and a stock value increase, respectively, which led to increasing assets.

The number of affiliates belonging to large business groups on the list totaled 1,266, up by 148 from last year, and their combined assets amounted to 1,653 trillion won, up by 56 trillion won last year.

There was no change in asset rankings among the top 10 conglomerates since last September, but Lotte, the country’s fifth largest business group that has raised its assets by 7.5 trillion won, narrowed the gap with the fourth largest conglomerate LG.

Outside the top 10, Shinsegae Group rose to 11th place from 14th while S-Oil moved up from 25th place to 22nd.

In contrast, Hanjin Group fell from 11th to 14th in the wake of the bankruptcy of Hanjin Shipping and Daewoo Shipbuilding & Marine Engineering slid from 18th to 20th.

By Seok Min-soo

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