South Korea's antitrust watchdog approves KORAIL's takeover of SR Corp.

By Kang Yoon-seung

SEOUL, Aug. 2 (Yonhap) -- South Korea's antitrust watchdog on Sunday approved the takeover of SR Corp. by Korea Railroad (KORAIL) Corp., saying the deal is unlikely to hinder competition in the transportation industry.

The Fair Trade Commission (FTC) said the decision came as KORAIL, as a state-run company subject to government oversight, is unlikely to abuse its market position or adversely affect consumers.

KORAIL is a state-run railway operator whose trains mainly depart from Seoul Station, while SR is a company in which the government holds a 58.95 percent stake, with KORAIL owning the remaining shares.

SR operates the Super Rapid Train (SRT), which departs from Suseo Station in southern Seoul.

"Above all, the high-speed rail industry is significantly regulated by the Railroad Service Act and other related laws," the FTC said, noting KORAIL serves a public interest.

The watchdog also pointed out that ticket fares cannot exceed ceilings set by the transport and finance ministries, noting KORAIL cannot unilaterally raise fares.

KORAIL also cannot reduce the number of seats, cut service frequency or change service routes without approval from the land minister.

The FTC and the land ministry, meanwhile, signed a memorandum of understanding the same day to continue monitoring KORAIL's business operations after the takeover.

The takeover is expected to be completed in September.