Intra-group transactions decline in 2020, FTC reports

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Intra-group transactions decline in 2020, FTC reports

Intra-group transactions fell in 2020 from a year earlier on tough regulations, the antitrust regulator said Tuesday.
The value of these transactions by 2,182 units of 71 large business groups amounted to 183.5 trillion won ($155 billion) last year, down 13.2 trillion won from 196.7 trillion won the previous year, according to the Fair Trade Commission.
Such deals accounted for 11.4 percent of all their business contracts last year, down from 12.2 percent a year earlier.
Large business groups with assets exceeding 5 trillion won are required to publicly file their business information, and those with 10 trillion won in assets or more are banned from making equity investments in related companies or offering intra-group loan guarantees.
The number of business groups subject to the commission's tough filing rules rose to 71 for this year from 62 the previous year.
Intra-group trading has been blamed for allowing some shareholders to extract large profits by having subsidiaries award lucrative contracts to each other, undermining the principle of fair competition.
Intra-group transactions by the country's top 10 groups, including Samsung Group and Hyundai Motor, came to 135.4 trillion won last year, down 15 trillion won from a year earlier.
Of the 10 large companies, only two groups-- Samsung and Hyundai Motor -- reported a rise in the value of intra-group trading.
Hyundai Motor's intra-group transactions totaled 38.5 trillion won, SK Group's 30.2 trillion won and Samsung's 26.8 trillion won.
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