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Nearly 90% of ‘intra-group’ deals granted without competition: FTC

By Korea Herald

Published : Nov. 9, 2011 - 16:42

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Nearly 90 percent of “intra-group” deals carried out between affiliates of major conglomerates last year were granted without open bidding, the antitrust watchdog said Wednesday.

The results are based on an analysis by the Fair Trade Commission of business deals and sales data compiled by 20 affiliates of the nation‘s leading business groups. They consist of 8 advertising, 8 systems integration and 4 logistics companies.

The companies were found to have received 9.16 trillion won ($8.23 billion) worth of business orders from other affiliates through intra-group trading last year. Of the total, 8.08 trillion won was granted without public auction, according to the FTC.

By sector, logistics and advertising firms received 99 percent and 96 percent of their deals without competition. For systems integration companies, the ratio was 78 percent, the FTC said.

The results confirmed suspicions that the nation’s leading conglomerates engage in intra-group trading aimed at granting massive amounts of orders and deals to their affiliates.

The watchdog has been investigating such suspicions in order to crack down on unfair business practices it sees as a hindrance to a fair competition environment for smaller firms, which are not affiliated with conglomerates.

“We have confirmed that affiliates belonging to large business groups tend to grant more orders to other affiliates without public competition,” the FTC said, stressing that it will make diverse efforts to tackle such business practices among large conglomerates. (Yonhap News)