Fair Trade Commission Approves US Private Equity Firm TPG's Acquisition of Lotte Rental...Lotte Group to Part Ways After 11 Years
A Pure Conglomerate Merger with No Overlap in Business Areas
Lotte Rental Shakes Off Monopoly Concerns and Begins a New Chapter under New Ownership
The Korea Fair Trade Commission has unconditionally approved the acquisition of Lotte Rental, the No. 1 car rental company in South Korea, by the global private equity firm Texas Pacific Group (TPG). Unlike the case earlier this year, when private equity firm Affinity Equity Partners was denied the same acquisition due to concerns about restricting competition, this merger was quickly approved as it was considered a pure conglomerate merger with no overlap between the related businesses.
On September 1, the Fair Trade Commission announced that it had given final approval for the acquisition of Lotte Rental shares by Lexicon Korea Holdco, a special purpose company (SPC) affiliated with TPG, concluding that there were no concerns about restricting competition. As a result, Lotte Rental, which became part of Lotte Group through the acquisition of KT Rental in 2015, will leave the Lotte Group after 11 years.
The decisive factor in this approval was the lack of overlap in business areas between the merging parties. The Fair Trade Commission analyzed that TPG's domestic private equity operations and its affiliate HB F&B's infant nutrition business have no complementarity or substitutability with Lotte Rental's main business, the domestic car rental market. As this is a textbook example of a merger between unrelated industries with no direct market conflict, the commission determined that there were no anticompetitive concerns under fair trade law.
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This stands in stark contrast to the commission's decision in January to prohibit Affinity Equity Partners, owner of SK Rent-a-Car, from acquiring shares in Lotte Rental. At that time, the commission concluded that if the No. 1 and No. 2 players in both the short- and long-term rental car markets were placed under a single major shareholder, it would effectively create a monopoly, inevitably leading to higher prices and consumer harm, and therefore blocked the acquisition entirely. In contrast, TPG, without overlapping mobility rental assets in its portfolio, easily cleared the same regulatory hurdles and is now moving forward smoothly with securing managerial control of Lotte Rental.
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