SEOUL, January 26 (AJP) - South Korea’s Fair Trade Commission (FTC) has blocked a proposed merger between Lotte Rental and SK Rent-a-Car, the country’s largest and second-largest rental-car operators, citing concerns that the deal would weaken competition and lead to higher prices.
The commission said on Monday it had issued such an order on a filing by private equity firm Affinity Equity Partners to acquire a 63.5 percent stake in Lotte Rental.
Affinity acquired SK Rent-a-Car in August 2024 and in March last year agreed to buy Lotte Rental shares held by Hotel Lotte and other shareholders for 1.8 trillion won, subsequently submitting a merger notification to regulators.
“The transaction would place the two leading competitors in the rental-car market under the control of a single private equity firm,” the FTC said in a press release.
It added concerns were “very large” that competition would be restricted, including through price increases.
The FTC said the combined entity would command a 38.3 percent share of the long-term rental-car market and would also become the dominant player in short-term rentals. By contrast, the third-largest short-term rental operator holds just over a 3 percent share, raising the risk of a market structure characterized by “one giant firm versus many small operators,” it said.
The commission also said its decision was based strictly on concerns that a private equity firm could dominate the top two operators, expand market power and later seek a high-priced resale, potentially distorting the market.
The FTC decision is expected to complicate Lotte Group’s efforts to raise cash. The conglomerate has been seeking to sell the noncore Lotte Rental unit amid weak performance and liquidity strains at key affiliates, including Lotte Chemical and Lotte Engineering & Construction.
With the 1.8 trillion won inflow no longer expected, the group will need to revise its broader financial restructuring plans.
The decision also undermines Affinity’s exit strategy. The firm had planned to merge SK Rent-a-Car and Lotte Rental to strengthen market dominance, boost corporate value and eventually sell the combined business. It must now pursue a standalone strategy to enhance SK Rent-a-Car’s competitiveness or explore alternative structures to acquire Lotte Rental.
* This article, published by Aju Business Daily, was translated by AI and edited by AJP.
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