The Fair Trade Commission has begun the preliminary consultation process regarding the merger efforts between Lotte Cultureworks and Megabox Central. With a large merger and acquisition (M&A) encompassing everything from movie investment and distribution to theater operations, the commission will examine concerns about consumer choice and competition restrictions.
According to the Fair Trade Commission on the 10th, Lotte Cultureworks and Megabox Central signed a memorandum of understanding (MOU) on May 8 and requested preliminary consultations with the commission on the 11th of last month. This utilized the preliminary consultation system established in August of last year, and this is the first time a large corporation's M&A has been submitted for preliminary consultation.
Preliminary consultations are a system that allows for the review of market definition, share calculations, and competition restriction concerns prior to formal corporate merger notification. By submitting the necessary materials in advance, companies can shorten the review period after the formal notification.
This merger is a transaction between two corporations that own a film investment and distribution company (Lotte Entertainment, Plus M) and a multiplex theater chain (Lotte Cinema, Megabox), respectively. Once the merger is completed, one of the two companies will dissolve while the other remains. The surviving corporation has not yet been determined.
Lotte Cultureworks is 86.37% owned by Lotte Shopping, while Megabox Central is 95.98% owned by Contentree JoongAng. Both major shareholders plan to co-manage the surviving company with the same equity after the merger.
The Fair Trade Commission plans to closely examine the concentration of market power and consumer impact from the preliminary consultation stage, as this M&A covers both movie investment and distribution as well as screenings. In the theater business, the 'member company structure' includes not only direct management but also consignment operations, indicating that a multifaceted market structure will also be subject to review.
The formal corporate merger notification is expected to be submitted after the results of the preliminary consultation and the signing of the main contract between the two companies. A commission official noted, 'This merger is a significant issue that will have a large impact on the market, and we plan to closely examine concerns about competition restrictions from the preliminary consultation stage.'