South Korea’s top antitrust regulator warned Tuesday that unfair intra-trading deals would be closely monitored to see whether they benefit owner families of conglomerates, during a morning meeting attended by company executives, including from Samsung and Hyundai.
“The Fair Trade Commission does not currently impose any specific sanctions or directly intervene in the operations of conglomerates for their high economic concentration or influence of owner families on the entire group while holding a small stake,” said FTC Chairperson Joh Sung-wook during a breakfast meeting hosted by the Korea Chamber of Commerce＆Industry in Seoul.
FTC Chairperson Joh Sung-wook speaks at a breakfast meeting with top company executives on Tuesday in Seoul. (KCCI)
“What we see as a problem, however, is that some companies make illegal intra-trading deals for the personal gain of owner families. This inflicts losses on minority shareholders while the beneficiaries take the opportunities of smaller companies,” Joh added.
The meeting was attended by around 300 business people, including Samsung Electronics CEO Yoon Boo-keun, Hyundai Group Chairwoman Hyun Jung-eun, Hyundai Motor President Kong Young-woon and former Doosan Chairman and Korea Chamber of Commerce & Industry chief Park Yong-maan.
Following her appointment to the top post in September, Joh has been seen sending bold messages against any unfair business practices targeting large companies at public events.
“We won’t impose sanctions on all intra-trading deals. We will only regulate deals that illegally help management succession, increase the stake of largest shareholders and help owner families have personal gain,” she said.
Among Korean companies with assets of more than 5 trillion won ($4.2 billion), the average portion of intra-trading deals accounted for 12 percent -- a combined 198 trillion won -- out of their sales last year, according to the FTC.
The antitrust watchdog’s chief went on to say that illegal intra-trading deals are more rampant in companies that are large but whose assets are less than 5 trillion won as the laws are being more strictly applied for bigger firms.
“We will monitor the companies whose assets are less than 5 trillion won with more data and documents. If there is any illegal deal, we will strictly enforce the laws,” Joh said.
The FTC will not only regulate Korean companies but also enforce sanctions on foreign companies to improve unfair business practices, according to the chief.
“In the ‘fourth industrial revolution,’ foreign companies, such as Google, Apple, Facebook and Amazon, affect Korean consumers and businesses by providing new products and services through disruptive innovation,” she said.
Joh said this can be good for consumers, but could affect new entrants as their market dominance can create entry barriers. This can be “an opportunity and a risk.”
“The fourth industrial revolution is another challenge for the FTC. In order for them not to abuse market dominance, we will ponder with a balanced perspective.”
Following Joh’s speech, business leaders, including Samsung Electronics CEO Yoon Boo-keun and Hyundai Group Chairwoman Hyun Jung-eun, declined to make any comments to reporters.
By Shin Ji-hye (firstname.lastname@example.org)