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In the digital economy, M&A financial reporting standards are based on turnover volume that measure past performance between contracting parties. However, this could result in regulatory defects in M&As between start-ups and pharmaceutical companies. The Korea Anti-Monopoly and Fair Trade Act (the “Act”) compiled by the Korea Fair Trade Commission(KFTC) is designed to promote the effectiveness of M&A in Korea by adding the transaction value of M&A transactions to the turnover volume. In order to meet international standards, the existing total assets and domestic turnover standards for overseas M&As are also required to be abolished.

The specific transaction value is expected to be discussed in the future. In the meanwhile, two basic considerations for the amendment of the enforcement decree of the Act should be decided as follows: 1) the amount should be calculated referring to foreign judicial judgments and/or the respective economy of those nations, 2) it should properly reduce the numbers of reports for acquisitions pursuant to the current reporting guideline. The Korea Fair Trade Commission should also reevaluate and raise the standard of approval for corporate acquisitions worth 300 billion won (approximately $225 million) after calculating the number of cases that the KFTC can deal with.

In addition to the above-mentioned transaction price criteria, international M&A needs to reflect the impact on “domestic activities.” In this light, qualitative standards such as German requirements (meaning domestic activities) for M&A transactions avoid controllability and predictability. Therefore, it is necessary to actively seek quantitative criteria. In doing so, the revised enforcement decree should be revised in order to raise the total amount of assets or sales to a considerable extent.

In the case of international M&As, the KFTC is likely not to conduct a merger investigation without any requirements or obligations. If mergers that do not require an investigation can be investigated at any time, it would undermine legal stability. Lastly, when international M&A regulations apply, it is appropriate to abolish the “domestic turnover” standard, which is not practical.