Under Article 7 Paragraph 2 Item 2 of the Act, the KFTC allows exceptions to the merger control when a merging firm’s total capital, as indicated in a balance sheet, is less than its paid-in capital for a reasonable period of time. In particular, a failing firm defense can be accepted when “the continued use of the company’s production facilities in the relevant market should be difficult in the absence of a merger (Paragraph 1)” and “carrying out a combination of enterprise that is less anti-competitive than the combination of enterprise in question should be difficult” as prescribed under Article 12-4 of the Enforcement Decree of the Act.