The Korea Fair Trade Commission on the 26th blocked a merger between Lotte Rental, the No. 1 player in Korea's rental car market, and No. 2 SK Rent-a-Car. It is unusual for a merger to be rejected. Since 2003, only nine out of 15,000 merger filings with the Korea Fair Trade Commission (FTC) were disallowed. That means 99.94% were approved and only 0.06% were rejected.
Why did the Korea Fair Trade Commission (FTC) not allow the merger between Lotte Rental and SK Rent-a-Car this time? The main reason, it found, is that even if their combined market share would be under 50%, a single dominant large corporation could push out small and midsize firms and ultimately raise consumer prices, creating structural problems.
◇ Why the "No. 1–No. 2 merger" was a problem
The core factor the Korea Fair Trade Commission (FTC) looked at was market structure rather than the market share figures. Although there are many operators in the rental car market, the commission judged that the number of players actually going head-to-head on price and terms is limited. It saw Lotte Rental and SK Rent-a-Car as rivals that have checked each other while leading competition on terms, including discounts and promotions. If the two companies become one, that counterbalance would disappear.
In the short-term rental car market, Lotte Rental and SK Rent-a-Car together have about a 30% share on the mainland and just over 20% in Jeju. The figures alone do not suggest a monopoly, but the Korea Fair Trade Commission (FTC) focused on the question of who effectively sets prices rather than market share. It determined that if the two companies merge, the short-term rental car market would be reorganized into a structure of "one large corporation versus a multitude of small operators," which could significantly weaken price competition.
The commission also saw a high risk of weakened competition post-merger in the long-term rental car market. Based on Korea Fair Trade Commission (FTC) data, the combined market share of the two companies would exceed 38%. It also noted that the merged entity would be larger than the combined size of the No. 2 through No. 7 players. The point is that a company could emerge that effectively leads pricing and terms in the market.
◇ "There are concerns about price hikes and the disappearance of discounts and promotions"
This decision is in line with past cases of merger denials. The Korea Fair Trade Commission (FTC) has not allowed mergers even when market share did not exceed a certain level if a merger between the No. 1 and No. 2 players would eliminate the central axis of competition.
A representative case is the 2024 rejection of the merger between MegaStudyEdu and ST Unitas (Gongdangi). At the time, their combined market share was expected to rise to around 70%, but what the Korea Fair Trade Commission (FTC) took issue with was not the figure itself, but that the merger would eliminate the sole competitive relationship in which the two checked each other in the online civil service exam lecture market.
The 2016 rejection of the SK Telecom–CJ HelloVision merger reflected concerns about the emergence of a player that could control prices and terms in the broadcast and pay TV competitive landscape. The 2014 rejection of the Essilor–Daemyung Optical merger cited concerns about weakening competitive pressure in the lens distribution market. In these cases, the Korea Fair Trade Commission (FTC) commonly used as a criterion whether, after the merger, there would emerge a company that could substantially control prices or transaction terms.
A legal expert specializing in fair trade said, "The crux of this case is that the check-and-balance structure between the No. 1 and No. 2 players that had been competing on price in the rental car market would disappear," adding, "The Korea Fair Trade Commission (FTC) opted for a rejection instead of conditional approval because it appears to have judged that, once the rival is gone, merely capping prices would not be enough to prevent a weakening of competition."