The head of South Korea's antitrust watchdog voiced his opposition Thursday to some measures being pushed by presidential candidates to reform the country's large conglomerates, known as chaebol.

The three major candidates have called for an overhaul of sprawling conglomerates under the name of "economic democratization" in what critics say is meant to curry favor with voters ahead of the Dec. 19 presidential election.

Fair Trade Commission Chairman Kim Dong-soo cautioned against imposing a ceiling on equity investment by conglomerates, noting the proposed move could limit investments needed for sound growth.

The equity investment ceiling is designed to limit conglomerates to only investing a certain percentage of their net assets in other companies.

Kim also balked at banning cross shareholding arrangements among large business groups, a practice that allows a handful of people with small stakes to control the decision-making process at all of their subsidiaries.

Moon Jae-in of the main opposition Democratic United Party said he has vowed to reintroduce the investment ceiling system for the country's top 10 chaebol that was phased out in 2009, significantly strengthen the firewall between manufacturing and financial firms, and ban all existing cross-shareholdings arrangements within three years.

Meanwhile, ruling Saenuri Party candidate Park Geun-hye did not call for an end to existing cross-shareholding arrangements. She has proposed measures that will restrict the power of chaebol, which are accused of monopolizing the country's economic activities at the expense of small and medium-sized companies.

Kim said a ban on cross shareholding arrangements is not effective in improving corporate governance as companies can maintain and expand their control through other equity investments among affiliates.

Some companies have expressed concerns that they could be exposed to hostile mergers and acquisitions if their voting rights related to existing share holdings are curtailed.

Kim also expressed concerns that tightening regulations on holding companies could deter large business groups from adopting the holding company structure and prompt even those already using the system to bolt.

A holding company refers to a firm that usually does not produce goods or services, but its purpose is to own shares of other companies.

South Korea eased regulations in 2007, making it easier for firms to become holding companies. Some say that the holding company system can help streamline corporate governance, but others argue it could allow a small amount of capital to wield a huge influence over other companies.

Independent candidate Ahn Cheol-soo, the founder of AhnLab, South Korea's largest anti-virus software company, has advocated banning all cross-shareholding arrangements and called for more restrictions over holding companies.

Chaebol have played a key role in transforming South Korea into Asia's fourth-largest economy from the ashes of the 1950-53 Korean War, though they have long been at the center of public criticism over their perceived abuse of economic power and wealth concentration. (Yonhap News)