South Korea’s antitrust watchdog has announced its decision to prevent a Singapore-based private equity fund from purchasing the country’s largest vehicle rental company. The Fair Trade Commission (FTC) has prohibited Careena Transportation Group Ltd., controlled by Affinity Equity Partners, from acquiring a 63.5 percent stake in Lotte Rental Co. The FTC expressed concerns that this acquisition could severely limit market competition, especially with Affinity already owning SK Rent-a-Car Co., the nation’s second-largest rental car operator.
The FTC stated that the merger could lead to a significant risk of restricting competition, potentially causing price hikes in the domestic rental car market. By consolidating the top two car rental companies under one private equity firm, market concentration would increase, affecting both short-term and long-term rental markets. The watchdog emphasized that competition in the rental car industry, particularly in short-term rentals and long-term leases, could be negatively impacted by this transaction.
According to the FTC, the combined market share of the two companies in the short-term rental market was 29.3 percent on the mainland and 21.3 percent on Jeju Island by the end of 2024. In the long-term rental market, their market share has consistently hovered around 30 percent for the past five years, reaching 38.3 percent by the end of 2024. The commission warned that the lack of competition between these leading firms could lead to adverse effects such as increased rental fees.
The FTC’s decision serves as a cautionary measure against private equity-led mergers that could distort fair competition by rapidly consolidating market power through the acquisition of major competitors. It aims to prevent scenarios where firms acquire competitors with the intention of reselling them at higher valuations, thus distorting market dynamics.
