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SK Rent A Car’s Jeju Branch. (Photo courtesy of SK Rent A Car) |
[Alpha Biz= Kim Jisun] South Korea’s Fair Trade Commission (FTC) has blocked a proposed acquisition of Lotte Rental by private equity firm Affinity Equity Partners, citing significant concerns over reduced competition and potential price hikes in the rental car market.
On the 26th, the FTC announced that it had decided to prohibit the business combination after reviewing Affinity’s plan to acquire a 63.5% stake in Lotte Rental. The regulator concluded that the deal would substantially restrict competition.
If approved, the transaction would have placed the nation’s two largest rental car operators—Lotte Rental (No. 1) and SK Rental Car (No. 2)—under common ownership. Affinity acquired SK Rental Car in August 2024.
The FTC separately assessed the short-term rental market (contracts under one year) and the long-term rental market (contracts of one year or more), noting differences in customer bases and competitive dynamics.
In the short-term rental segment, Lotte Rental and SK Rental Car have consistently held the top two positions. As of the end of 2024, their combined market share reached 29.3% in inland regions and 21.3% on Jeju Island. Most other competitors are small-scale operators with negligible market presence. The two leading firms also significantly outperform smaller rivals in financing capacity, brand recognition, nationwide sales networks, IT infrastructure, vehicle maintenance, and used-car sales capabilities.
The FTC determined that a merger between the two would further intensify market concentration, weaken competition between major players, and inevitably lead to higher rental prices.
Similar concerns were raised in the long-term rental market, where Lotte Rental and SK Rental Car again rank first and second, with a combined market share of 38.3% as of the end of 2024. While some large capital companies operate in this segment, regulatory constraints under the Specialized Credit Finance Business Act limit their ability to significantly expand long-term rental fleets compared to leasing businesses.
Given that long-term rentals rely heavily on vehicle maintenance and used-car resale after contract expiration, the FTC noted that Lotte Rental and SK Rental Car enjoy a structural competitive advantage due to their integrated operations. As a result, the regulator concluded that the merger would likely lead to price increases and other anti-competitive effects in the long-term rental market as well.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
