The Fair Trade Commission (FTC) imposed fines totaling 46.7 billion KRW on five large conglomerates this year for unfair support to affiliates and embezzlement of private interests. The commission stated its commitment to continuing monitoring of unfair practices in areas closely related to citizens’ lives.
The FTC announced that it had identified five cases this year involving unfair support and improper profit provision to affiliates within business groups, specifically in the food distribution market, pharmaceuticals, cosmetics, construction raw materials, and residential building construction sectors.
In August, the FTC detected an unfair support practice where A Industry favored a second-generation company of its owner. The company was fined 11.62 billion KRW. A Industry had purchased raw materials under favorable terms to unjustly support B, a company owned by the owner’s second-generation. The FTC issued a corrective order and reported A Industry.
An FTC official emphasized, “A Industry bought a significant amount of ready-mixed concrete at higher prices than non-affiliates from B, establishing a basis for the owner’s heir’s management succession,” highlighting the hidden unfair support in the construction raw material market crucial to public welfare.
In October, unfair support by C Construction was identified, resulting in a 9.7 billion KRW fine. C Construction, lacking construction capacity, selected an affiliated company without reasonable grounds as a joint contractor for a public land development project, providing considerable work volume to increase its construction performance and profitability.
In August, D Corporation was fined 24.5 billion KRW for unfair personnel support to an affiliate. D Corporation entered the regional food distribution market mainly occupied by small merchants through a joint venture, E, providing 221 staff members and covering 33.4 billion KRW in labor costs for 12 years and 8 months to help E establish itself in the market.
In June, F Company was penalized 510 million KRW for improper labor support to a second-generation company of its owner. F Company dispatched its staff to G, purchased by the owner’s heir, from August 2016 to May 2020, shouldering most labor costs.
Earlier this month, the FTC imposed a 435 million KRW fine on H Company for unfair profit provision to a related company. H, a pharmaceutical manufacturer and distributor, provided storage services and trademark rights free of charge to a highly affiliated company without reasonable basis, leading to unjust benefits.