Watchdog slams Shinsegae for unfair affiliate aid
The Fair Trade Commission (FTC) said it gave fines of 4.06 billion won (US$3.65 million) to three Shinsegae companies -- Shinsegae, E-mart and Everyday Retail -- and ordered them to correct their practice of setting a low commission rate for Shinsegae SVN and Chosun Hotel, the bakery and hotel arm of the conglomerate.
Internal documents and minutes showed that the retail group unfairly aided Shinsegae SVN after revenue growth at the bakery business dramatically slowed since 2009, according to the FTC.
Chung Yu-kyuang, the daughter of Shinsegae Group Chairwoman Lee Myung-hee, holds a 40 percent stake in Shinsegae SVN.
Unfair trade totaled 184.7 billion won, while the amount of aid money came to 6.2 billion won, according to the watchdog.
The FTC said the group's support boosted Shinsegae SVN's revenues but weighed on rival bakery businesses and smaller pizza companies.
Shinsegae SVN saw its revenue reach 256.6 billion won last year, almost doubling from 136.6 billion two years earlier. Chung also took 1.2 billion won in dividends during the cited period.
The retail giant, however, refuted the watchdog's claim and vowed to fight back.
"It's difficult to acknowledge the fact (the group) unfairly supported (its affiliates) through sales commission rates and store leases," Shinsegae said.
"Following a legal review, the group will prudently consider a lawsuit against the FTC to dissolve the fines." (Yonhap)
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