The Korea Fair Trade Commission (KFTC) has approved the merger in which NS Home Shopping, a subsidiary of Harim Group, acquires the Homeplus Express division from Homeplus.
The deal involves NS Home Shopping taking over the Homeplus Express business from Homeplus for 120.6 billion won. The KFTC said it completed its review quickly, about a month after the filing, taking into account that Homeplus is undergoing rehabilitation proceedings.
Harim Group is a poultry and food-focused conglomerate that has vertically integrated grain procurement, feed, livestock, slaughtering, processing, and distribution. In addition to its main products, chicken such as broilers, young chickens, and native chickens, it also produces and sells pork, duck, various meat products, ready-to-eat meals, and pet food. Through NS Home Shopping, it has also expanded into the TV home shopping and e-commerce markets.
Homeplus Express, along with GS The Fresh, E-Mart Everyday, and Lotte Super, falls under the category of corporate supermarkets, or SSMs, subject to the Distribution Industry Development Act. Food accounts for an average of 93% of total sales at SSMs. Recently, rising food sales through online retail channels have created significant competitive pressure, while pressure from adjacent markets such as large food wholesalers and mid-sized general supermarkets is also substantial.
The KFTC said the asset transfer would create 11 vertical mergers and two mixed mergers. The vertical mergers involve combining Harim Group's manufacturing product lines with Homeplus Express's distribution network, while the mixed mergers involve combining NS Home Shopping's TV home shopping and online mall channels with Homeplus Express's offline retail network.
It judged that, except for three vertical mergers related to chicken, the remaining 10 vertical and mixed mergers were unlikely to restrict market competition because their market shares are low. Even in the chicken segment, Homeplus Express's share is lower than that of competing SSMs. If the adjacent general supermarket market is also considered, its share is only in the 2% range. The commission therefore saw little likelihood that rival poultry companies would be pushed out of the market because they could not find sales channels, or that competing distributors would be disadvantaged because they could not secure Harim's poultry supply.
Meanwhile, on the 12th, Homeplus requested a loan of 200 billion won in emergency operating funds needed to normalize operations, saying that a 100 billion won loan under review by Meritz Financial Group would not be enough to complete its rehabilitation process.
Meritz Financial Group had said the previous day that it was willing to provide a loan within the 100 billion won limit covered by the joint guarantee from MBK Partners.
Kim So-hyoung compact@sportschosun.com
