Introduction and Summary

On September 9, 2026, the Korea Fair Trade Commission (KFTC) published a Proposed Amendment to the Merger Notification Guidelines to Address Blind Spots in New-Type Business Combinations (Proposed Amendment).[1] The KFTC placed the Proposed Amendment on administrative pre-announcement (Announcement) until September 30, after which time it will finalize and implement the Proposed Amendment after fully reviewing the opinions of interested parties.

The Information Technology and Innovation Foundation (ITIF) is an independent, nonprofit, and nonpartisan think tank based in Washington, DC. ITIF’s mission is to formulate, evaluate, and promote policy solutions that accelerate innovation and boost productivity to spur growth, opportunity, and progress. ITIF has extensive expertise in competition policy and in assessing how regulatory policies affect competition, investment, and innovation, including in emerging technology markets. The University of Pennsylvania has recognized ITIF as setting the global standard for excellence in science and technology policy and as one of the overall “Top 40 U.S. Think Tanks.”[2]

ITIF appreciates the opportunity to comment on the Proposed Amendment. ITIF’s principal concern is that the Proposed Amendment would substantially expand merger notification requirements by bringing certain talent-acquisition transactions, or “acqui-hires,” within their scope, without a demonstrated need to address a material competitive problem. Its broad scope and lack of a clear limiting principle could subject acqui-hires with little or no plausible competitive significance to notification requirements, imposing unnecessary burdens and potentially chilling investment, experimentation, and innovation.

ITIF explains why there is no demonstrated need for the Proposed Amendment, examines the problems caused by its broad scope, and offers recommendations for a more targeted approach.

The KFTC Does Not Identify the Benefits of Acqui-Hire Notifications

An “acqui-hire” is a transaction in which a company acquires another company primarily to obtain its employees and the knowledge, skills, or expertise they possess, rather than to acquire the target’s business as an ongoing operation. The Announcement states that the Proposed Amendment is intended to prevent violations of the notification obligation for business transfers prescribed by the Monopoly Regulation and Fair Trade Act (the Act) by clarifying that acqui-hires are included in these transfers.

To establish that acqui-hires constitute a business transfer, the Proposed Amendment redefines “business” under the Act’s Restriction on Business Combinations section to include organized personnel where they “and the technology or knowledge held by [them] are combined and can perform a core function of business activities.” In effect, the Proposed Amendment would treat certain acquisitions of personnel and their associated knowledge or expertise as business combinations requiring notification, even where the transaction does not involve the acquisition of a conventional operating business.

While ITIF is not opposed to additional antitrust regulations in principle, every new notification requirement imposes administrative and compliance costs, as well as the risk of erroneous intervention. Such requirements are therefore justified only when their anticipated benefits outweigh these costs. Yet the Announcement does not cite a single instance where an acqui-hire was successfully challenged on competition grounds, nor does it cite a case in which an acqui-hire was consummated that the KFTC would have prevented had it been notified ahead of time. Instead, the Announcement emphasizes that the Proposed Amendment was prepared to prevent violations of the notification obligation “in advance.” Until the KFTC conducts a study regarding the anticompetitive harm of acqui-hires in the Korean market, the benefits of the Proposed Amendment are speculative, at best, while the costs are substantial, as discussed below.

The Proposed Amendment Captures Low-Value Acqui-Hires That Are Unlikely to Effect Competition

The Act forbids the acquisition of a principal part of another company’s business that has the effect of substantially restricting competition in a particular business area.[3] According to the Announcement, “principal part” currently refers to those parts that can be operated as independent business units or whose “acquisition or lease brings about a substantial decrease in the transferring company’s sales.” The Proposed Amendment would redefine principal part to include those whose acquisition enables the acquiring company “to carry on the same business activities as those the transferring company was conducting” so long as “the acquisition amount is [10 percent] or more of the total assets…of the transferring compan[y] or is KRW 10 billion.”

ITIF appreciates the inclusion of asset-percentage and transfer-value thresholds as an attempt to exclude at least some acqui-hires from the notification obligation. However, these thresholds are set at levels that would capture transactions with little apparent connection to competition. The existing definition focuses on whether an acquisition causes a “substantial decrease in the transferring company’s sales,” which at least gauges the transaction’s impact on a potential competitor, even if it does not directly measure its effect on competition. By contrast, the Proposed Amendment would bring relatively modest acqui-hires within the definition of a “principal part” based solely on a small share of the target’s assets involved or the value of the transaction.

The KRW 10 billion transaction-value threshold is particularly low in comparison with the value of transactions in the technology sector. It represents only 11 percent of the median acquisition value of AI startups from 2024 through the first half of 2025 (KRW 91 billion), an industry specifically identified by the Announcement.[4] It is also less than 2 percent of the KRW 600 billion transaction-value reporting threshold and only 33 percent of the KRW 30 billion asset-or-sales threshold for the acquired company under the existing reporting regime.[5] These thresholds therefore risk sweeping relatively small transactions into the notification regime without demonstrating that those transactions are likely to affect competition. At the same time, by subjecting acqui-hires to notification based on transaction value rather than competitive significance, the Proposed Amendment could discourage larger firms from acquiring promising startups and entering new markets—potentially reducing, rather than promoting, competition and innovation.

Recommendations

For these reasons, ITIF respectfully offers the following recommendations for the Korea Fair Trade Commission in relation to the Proposed Amendment:

▪ Postpone implementation of the Proposed Amendment until performing a market study: Given the predictable costs of subjecting acqui-hires to notification obligations, the KFTC should perform a market study to determine whether these costs are likely to be offset by corresponding benefits in the Korean market. 

▪ Bring the acqui-hire transaction-value threshold in line with extant review thresholds: The inclusion of a transaction-value threshold evinces a well-founded sensitivity to the costs of subjecting such business transactions to KFTC review, but the threshold should be substantially increased to achieve the effect of excluding trivially neutral or procompetitive acqui-hires from burdensome reporting requirements.

Conclusion

Competition policy aims to protect competition, not competitors. However, by subjecting acqui-hires, especially of such low value, to reporting requirements, the Proposed Amendment would have the effect of “protecting” startups by frustrating larger firms from acquiring their founders and employees. Adopting such a policy would predictably chill incentives to innovate—talented people forgo lucrative traditional employment opportunities precisely because of the possibility of windfall acquisitions and acqui-hires—and hinder the diffusion of technology that acquirers, with their typically superior production and distribution infrastructure, can bring to bear. 

Thank you for your consideration.

Endnotes