FTC may fine SK Discovery over false sterilizer ads

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FTC may fine SK Discovery over false sterilizer ads

The Fair Trade Commission (FTC) is considering fining SK Discovery, the holding group of SK’s chemical and material businesses, over the use of misleading advertisements during the 2011 humidifier sterilizer tragedy.

The Fair Trade Commission on Monday said it will be holding a meeting on Wednesday to decide whether to impose penalties on SK Discovery, which was spun off from SK Chemical in December.

Earlier this month the antitrust agency reported former executives of SK Chemical and Aekyung Industrial, including a former proxy chairman of SK Group, to the prosecutors’ office and fined SK Chemical 39 million won ($36,000). The company ran advertisements that claimed that its humidifier sterilizer not only cleaned humidifiers but provided actual health benefits including aromatic therapy, according to the FTC.

SK Chemical manufactured humidifier sterilizers between October 2002 and April 2012. The sterilizers were sold by Aekyung Industrial.

However, the antitrust agency omitted SK Discovery from the penalty, later claiming that SK Group failed to properly inform the agency of its recent conversion to a holding company structure.

SK Discovery was spun off in December as the holding company in control of SK Chemical, SK Gas and SK D&D, a real estate and renewable energy development company.

According to a SK Discovery spokesperson at the time, SK Chemical had previously acted as a de facto holding company while also in charge of the chemical and pharmaceutical businesses. However, as it was considered inefficient, SK Discovery was created to focus on being the holding company while SK Chemical was to become fully committed to the chemical and pharmaceutical businesses.

The prosecutors’ office is under pressure to quickly handle the humidifier sterilizer case as the statute of limitation against SK Chemical expires in April.

The FTC, however, denied local media reports that the Seoul central prosecutors’ office sent back the report filed by the FTC to make changes including adding SK Discovery.

Such a mishap is expected to hurt the agency’s credibility, which FTC Chairman Kim Sang-jo has been emphasizing - especially in handling the humidifier sterilizer case.

Not only has he created a task force that specifically handles humidifier sterilizer cases but has also publicly apologized for the mishandling of the case under the Park Geun-hye administration.

The FTC under Park did not include SK Chemical and Aekyung Industrial among the companies that were fined. The executives of the two companies were also not prosecuted, citing lack of evidence that the chemical components used in the humidifier sterilizer developed by these companies had damaging effects on consumers.

However, the FTC under Kim reopened the case at the request of civic activists and reversed the earlier conclusion, claiming that the FTC during the Park administration had prematurely closed the case when studies proved that the chemical components were harmful when inhaled.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]
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