KoreaCrunch

The Korea Fair Trade Commission(KFTC), South Korea’s anti-trust watchdog approved conditional approval for U.S. online auction site eBay Inc.’s bid to buy into very big online retailer Gmarket (http://www.gmarket.co.kr) The eBay’s Korean property, Internet Auction (http://www.auction.co.kr) also has been very big player in this area.

So Gmarket and Internet Auction eBay’s South Korean unit, when combined would control 87.2 percent of the local online retail market. You may wander this makes anti-trust issue for existence of big player with exclusive market share.

For your understanding, online shopping was divided into two categories of retail (B2C) and auction(C2C). Internet Auction was started from C2C and Gmarket was did from B2C as the Interpark’s branch. But, nowadays it’s hard to be inseparable with both because of existence of personal power sellers from auction market. In fact, Gmarket has invaded Internet Auction’s share.

The KFTC said in a statement that it will approve the deal under the condition that the companies ban themselves from raising sales commissions for the next three years and limit increases in ads and other fees to below the local inflation rate. Despite concerns over the impact on the country’s C2C market, the KFTC approved the deal as most Internet-based markets are easily accessible and new competitors may emerge at any time in online markets.

eBay is now authorized to buy a 36 percent stake in Gmarket from Interpark and it plans to further boost their ownership in the company through purchases in the stock market. Gmarket’s major stock owners are Interpark with 29.49% and its CEO, Mr. Ki hyung Lee with 7.48% and Yahoo! Korea 9.1%.

Gmarket generated $35.6 million in profit on $238.2 million in revenue last year, whereas Internet Auction did $10.3 million in profit on $182.4 million in revenue last year too. Internet Auction was already acquired by eBay in Feb. 2001 and it has been almost exclusive players in C2C market before rapid growth of Gmarket from 2002 to 2005.