The regulator's examiners recommend conditional approval of the share swap that would put Naver Pay and the Upbit exchange under one roof, after assessing a won-stablecoin market that does not yet exist. A decision is expected by the end of the year.
South Korea's Fair Trade Commission said on Tuesday that its secretariat has submitted its review of Naver Financial's proposed acquisition of Dunamu, the operator of the Upbit cryptocurrency exchange, to the agency's full panel, recommending conditional approval after examining revised remedies offered by the companies, The Korea Herald reports. The panel will decide whether to approve the deal, impose conditions or block it, with a decision expected by year-end, nearly a year after the companies filed for approval.
Under the proposed all-stock transaction, each Dunamu share would be exchanged for about 2.54 Naver Financial shares, making Dunamu a wholly owned subsidiary of Naver Financial, Yonhap reports. The combination would bring together Korea's leading online payments provider and its largest cryptocurrency exchange in a digital finance platform valued at about 20 trillion won (US$14.9 billion).
The examiners identified twelve horizontal, vertical and conglomerate combinations arising from the deal and found competition concerns in ten of them, including online payment services, search portals, online advertising, online shopping, financial data aggregation and unlisted stock brokerage. The two direct overlaps, in listed stock investment platforms and online secondhand trading platforms, were presumed not to restrict competition under the regulator's safe-harbour criteria.
The review extended to the prospective market for won-denominated stablecoins, which has no established regulatory framework. "I don't recall us ever assessing competition concerns in a market that had yet to form," said Jeon Seong-bok, director general of the FTC's Business Transactions and Merger Review Bureau, adding that a bill on won-denominated stablecoins had been introduced and the companies' submissions showed entry into that market was a priority for them. The FTC declined to disclose the proposed remedies; Jeon said possible conditions could include requiring the combined company to treat competitors equally or restricting certain practices. Naver and Naver Financial said in a joint statement that they had provided the requested information throughout the review and would continue to cooperate.
