The Fair Trade Commission of South Korea (FTC) has started reviewing the merger request between the South Korean conglomerate Shinsegae and the Chinese giant Alibaba, a partnership that promises to significantly impact the country’s e-commerce sector.
Merging Details
On January 24, the FTC announced that it had received the merger notification between Shinsegae and Alibaba International. Both companies are looking to establish a joint venture called Grand Opus Holdings, under which they will operate two platforms: Gmarket, owned by Shinsegae, and AliExpress Korea, a subsidiary of Alibaba.
The structure of Grand Opus Holdings will be divided into 50% ownership for Apollo Korea, a subsidiary of Shinsegae, and 50% for BK4, a subsidiary of Alibaba International. Apollo Korea will contribute 100% of the shares of Gmarket, while BK4 will provide 100% of the shares of AliExpress Korea and an additional capital of $225 million (approximately 3.2 billion won).
FTC Assessment Process
The Fair Trade Commission has a maximum period of 120 days to decide whether to approve the merger, analyzing criteria such as:
- Changes in market share.
- Impact on competition and potential barriers to entry for new players.
- Effects on the dynamics of the e-commerce market.
Although the standard time for evaluating mergers is 30 days, the FTC can extend the period up to an additional 90 days if deemed necessary. Despite the potential approval, both platforms—Gmarket and AliExpress—will continue to operate independently, according to the companies involved.
Expected Impact on the E-Commerce Market
The merger between Shinsegae and Alibaba could significantly alter the landscape of the e-commerce sector in South Korea. Currently, Gmarket is the third-largest platform in the country, behind Coupang and Naver, while AliExpress has shown rapid growth, even surpassing Gmarket in terms of monthly active users.
The collaboration promises to create important synergies by combining Shinsegae’s expertise in the South Korean market with Alibaba’s global and technological reach. This move could also intensify competition with giants like Coupang, which leads the market, and Naver, which dominates local search and technology.
Company Backgrounds
- Gmarket entered the e-commerce market in 2003 and was acquired by eBay in 2009. Later, in 2021, Emart (part of the Shinsegae group) purchased the platform, integrating it into the South Korean conglomerate.
- AliExpress Korea, for its part, began operations in South Korea in 2023 as part of Alibaba’s plan to expand its influence in key markets.
Regulators’ View
A representative of the FTC stated: “Given the magnitude of the impact this merger could have on the national e-commerce market, we will gather a wide range of opinions from experts and competitors. We will ensure that the process strictly adheres to the standards and procedures established in the Fair Trade Act.”
Future Prospects
If approved, this strategic alliance could strengthen both companies’ positions in South Korea, allowing them to compete more effectively in a highly competitive market dominated by local players. At the same time, the agreement raises questions about how it will affect consumers and the competitive balance in the sector. The FTC’s decision will be crucial in determining the future of e-commerce in the country in the coming years.
via: sedaily. Image generated with grok.