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The purpose of setting merger notification thresholds is to determine the appropriate number of notifications and the jurisdictional limits of merger control. It is of paramount importance in the cases of multi-jurisdictional merger. Ways to delineate limits of national merger control consider its effective enforcement and possibility of sovereignty impairment.

The Korea Monopoly Regulation and Fair Trade Act (the “Act”) stipulates “effects principle” as a general principle for any possible extraterritorial application (Article 2-2 of the Act). To this end, domestic effects must be direct, substantial, and reasonably foreseeable. As for merger control, the Act stipulates a certain standard for notification separately that focuses on domestic revenues of 20 billion won per foreign participants, and it should be interpreted as to specify the principle of domestic effects provided in Article 2-2. Therefore, the notification thresholds overlap with the reviewing jurisdiction of the Korea Fair Trade Commission (the “KFTC”).

The KFTC, however, tried to review and impose remedy on some extraterritorial mergers, whose participants had the small size or none domestic turnover in Korea, without considering an obligatory notification. Such practices reflect the misunderstanding of the KFTC regarding the purpose and role of the notification thresholds. The close relationship between pre-merger notifications and review procedure is likely to increase legal certainty and foreseeability, and possibly avoid jurisdictions disputes.

Comparative analysis shows that competition authorities cannot review ex officio foreign-to-foreign mergers which do not require an obligation to notify. In this sense, the KFTC should refrain from ungrounded activism and present reasonable grounds for applying the extraterritoriality of merger control if necessary.