Court nullifies FTC's $48.6 million fine on SPC Group

Industry

Published: 01 Feb. 2024, 17:40 Updated: 01 Feb. 2024, 18:06

Court nullifies FTC's $48.6 million fine on SPC Group

SPC Group's headquarters in Seocho District, southern Seoul [NEWS1]

A Seoul court nullified the 64.7 billion won ($48.6 million) fine imposed on SPC Group, Korea's bakery and beverage giant, over allegations of unfair transactions across the group's affiliates.

The Seoul High Court's ruling came after five SPC Group affiliates filed a lawsuit against the Fair Trade Commission (FTC) seeking the nullification of the fine and corrective order. The court's decision, if upheld, will result in the cancellation of the 64.7 billion won fine.

The FTC's investigation, the results of which were announced in July 2020, concluded that SPC had engaged in unfair intragroup financial deals from 2011 to 2019, intervened by the head family, which brought inequitable proceeds to SPC Samlip.

Specifically, bakery chain Paris Croissant, bakery firm SPL and BR Korea, the domestic operator of Dunkin', were accused of helping SPC Samlip earn 41.4 billion won by purchasing flour and raw materials through Samlip as intermediary when direct purchase was feasible. Paris Croissant and Shany also purportedly sold shares of Mildawon, the group's grain subsidiary, to Samlip at a “remarkably low price.”

The Korean antitrust regulator argued that these actions aimed to inflate the stock value of Samlip, which is SPC's sole publicly listed entity, and ensure that the head family would remain in its leadership position.

The FTC imposed a corrective order and fine on the affiliates. It also filed a complaint against SPC Group Chairman Hur Young-in, former SPC Group CEO Cho Sang-ho and Paris Croissant CEO Hwang Jae-bok alleging breach of trust.

The court did rule, however, that the flour transactions predating 2015 were considered unfair financial transactions.

“In essence, the crucial aspects of this case, involving 'transit fee' transactions and the transfer of Mildawon shares, did not lead to the recognition of any unfair support by the SPC Group,” stated Barun Law, the legal representative for SPC. The court reportedly cited the lack of sufficient evidence supporting the claim that SPC Group had aimed to maintain leadership control and facilitate the head family's succession.

The initial trial of Chairman Hur, former CEO Cho and CEO Hwang is scheduled for Friday.

BY SEO JI-EUN [seo.jieun1@joongang.co.kr]