FTC begins looking for violations at chaebolThe Fair Trade Commission has begun combing conglomerates’ public disclosures for possible violations of antitrust law, the agency said on Sunday.
In particular, the regulatory authority wants to know whether these conglomerates, also known as chaebol, unfairly awarded contracts and projects to their own affiliates and hid them from public disclosures.
Many of these affiliates are owned by members of chaebol families, which means their profit often circles back to the companies that hired them.
The investigation, which began on Friday, targets 60 conglomerates with 2,083 affiliates whose combined assets exceed 5 trillion won ($4.5 billion).
Previously, the Fair Trade Commission would only select a few companies to investigate every year and look into public disclosures made in the last three to five years.
Starting this year, the antitrust regulator will probe all 60 of the country’s conglomerates and their affiliates, but it will only look at public disclosures made in the past year.
The commission plans to compare the announcements with other documents such as audit reviews and board meeting records to see if there were any intentional omissions or other violations.
Companies that failed to make proper disclosures could face a maximum fine of 70 million won.
Of the 60 conglomerates it is probing, the Fair Trade Commission is devoting special attention to 46 that have a dominant stake in their own affiliates. At these companies, the majority shareholders are members of the parent company’s owner family.
“By reducing the target of investigation to the past year, we are able to improve the timeliness, appropriateness and fairness of our investigation,” said Shin Bong-sam, head of the Fair Trade Commission’s business group bureau, “and by changing the way we’re focusing our investigations, we have improved their efficiency,”
The commission’s chairman, Kim Sang-jo, has been pushing for fairer competition in the market since his inauguration.
At a news conference celebrating his first year in office on June 14, Kim urged conglomerates to get rid of “nonessential” affiliates that he said were hurting small businesses.
Although the Fair Trade Commission cannot force conglomerates to sell off its holdings in affiliates, he said the agency would make targeted investigations of antitrust violations if they continue to hold onto them.
BY LEE HO-JEONG [firstname.lastname@example.org]