Samsung must sell shares by Aug.

The Fair Trade Commission (FTC) has set the legal grounds to force Samsung SDI to sell its 4.04 million shares in Samsung Group’s de facto holding company Samsung Construction & Trading (C&T).

The antitrust agency said Monday it would take legal action including fines if Samsung SDI does not sell the stake in Samsung C&T by Aug. 26.

The FTC came to the conclusion that a new cross-shareholding structure was created after the merger of Samsung C&T and Cheil Industries on Sept. 1, 2015, making Samsung SDI’s investment illegal.

During the merger in December 2015, the antitrust agency ordered Samsung SDI to sell 2.6 percent stake or 5 million shares of the total 9 million shares it had in Samsung C&T, allowing it to retain the remaining 4.04 million shares.

The key issue at the time was whether the merger created a new cross shareholding structure or not.

The FTC concluded that the merger strengthened Samsung SDI’s influence on Samsung C&T but it did not create a new cross-shareholding structure, which would have been deemed illegal under a regulation adopted in 2014.

It appears that ruling was the result of pressure by the Park Geun-hye Blue House on the FTC and allowed the founding family of Samsung Group to retain its control of affiliates while owning small stakes in each.

After the Moon Jae-in administration came to power last May the antitrust agency has been led by former civic activist and economics professor Kim Sang-jo, known to be critical of big conglomerates and their practices including complex cross-shareholdings among affiliates.

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