FTC fines three large conglomerates

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FTC fines three large conglomerates

The country’s antitrust agency slapped three local conglomerates with fines totaling 6.03 billion ($5.2 million) won yesterday for doing their subsidiaries unfair favors.

The Fair Trade Commission (FTC) fined Woongjin 3.43 billion won ($3 million), Hanwha 1.48 billion won and STX 1.13 billion won, it said.

According to the watchdog, Woongjin Group has been awarding its maintenance, repair and operation (MRO) orders to five of its affiliates led by Woongjin Holdings since 2005.

The holding company acted as the middleman in these transactions and turned a huge profit in the process, in addition to collecting 5.3 billion won in commission fees, the FTC found.

The FTC said the move was aimed at increasing Woongjin Holdings’ profits, and took into consideration the fact that the family of its chairman, Yoon Suck-keun, owns 78 percent of the company’s shares.

Separately, the agency said Hanwha had since 2006 been funneling the majority of its industrial oil to Hanwha Polydreamer, its affiliate that specializes in manufacturing packaging and industrial materials. This effectively starved its rivals of oil and was aimed at boosting the affiliate’s profits, the FTC said.

The investigation also showed that Hanwha awarded the company commission fees worth 5.5 billion won from 2005 to 2010, which helped it turn a profit this year. The affiliate’s debt ratio dropped from 780 percent in 2005 to 155 percent last year, the FTC added.

STX was found to have given its affiliates unfair construction orders.

Four years ago, STX Construction signed a deal with STX Offshore and STX Shipbuilding to build apartments. The construction arm received 65.3 billion won in payment and, in 2009, its industry ranking shot up from 150th to 50th. STX Group Chairman Kang Duk-soo holds a 75 percent stake in the company.

By Lee Eun-joo [angie@joongang.co.kr]

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