Jeju Auto House (Image courtesy of Lotte Rental)
SEOUL, Jan. 26 (Korea Bizwire) – South Korea’s antitrust watchdog said Monday that it has decided to block a Singapore-based private equity fund (PEF) from acquiring the country’s largest vehicle rental company, citing concerns that the deal would significantly restrict market competition.
Careena Transportation Group Ltd., controlled by private equity firm Affinity Equity Partners, has been barred from buying a 63.5 percent stake in Lotte Rental Co., the Fair Trade Commission (FTC) said, noting that Affinity already owns SK Rent-a-Car Co., the nation’s second-largest rental car operator.
“It is determined that there is a significant risk of substantially restricting competition, including possible price increases in the domestic rental car market, and therefore imposed a prohibition on the merger,” the FTC said in a statement.
The commission said the transaction would practically place the nation’s top two car rental companies under the control of the same private equity firm, leading to increased market concentration.
“The decision reflected serious concerns that effective competition would disappear if two companies in direct competition were merged,” Lee Byung-geon, a senior FTC official, told reporters. He added that it would be difficult for a meaningful new competitor to emerge in the short term.
The watchdog said the deal would harm competition in both the short-term car rental market, defined as rentals of less than one year, and the long-term rental market, where rental periods exceed one year.
As of the end of 2024, the two companies accounted for 29.3 percent of the short-term rental market on the mainland and 21.3 percent on the southern resort island of Jeju, while most remaining competitors are small operators.
In the long-term rental market, their combined market share has remained in the 30 percent range over the past five years, coming to 38.3 percent at the end of 2024 and showing an upward trend, the FTC said.
The commission warned that the elimination of competition between the two leading firms could result in anti-competitive effects, including higher rental fees.
The FTC said the decision would send a strong warning against private equity firm-led mergers that could distort fair competition by rapidly consolidating market power through the acquisition of leading competitors with the intent of reselling them at higher valuations.
Retail conglomerate Lotte Group, which owns Lotte Rental, said it respects the FTC’s decision.
The group said in a press release that it plans to consult with Affinity Equity Partners to explore additional proposals that could address the commission’s concerns about increased market dominance.
(Yonhap)
