Whether the Chairman's Direct Instruction Was Given Divided Mirae Asset's Judgment

[Sejong=Asia Economy Reporters Joo Sang-don and Moon Chae-seok] The key issue determining the level of sanctions by the Fair Trade Commission (FTC) against Mirae Asset Group was the 'involvement of the controlling family.' The FTC's decision to impose a fine rather than file a criminal complaint indicates that it viewed Chairman Park Hyun-joo's level of involvement as minimal.

On the 27th, an FTC official explained, "The FTC's prosecution guidelines stipulate that prosecution can only proceed if the degree of legal violation by related parties is serious." He added, "Although the same person, Park Hyun-joo, mentioned the business direction and profit status of Blue Mountain CC, as well as the advantages of Blue Mountain CC and Four Seasons Hotel, this was only done in the early stages of the business, and there was no direct instruction for use."

The Monopoly Regulation and Fair Trade Act (Fair Trade Act) requires scrutiny of whether preferential treatment is given when dealing with companies in which the controlling family holds 30% or more of shares in listed companies or 20% or more in unlisted companies, due to concerns over private gain by the controlling family. When selecting business partners, appropriate procedures such as objective and rational consideration and comparison of business capabilities, prices, and transaction conditions must be followed.

This time, the FTC judged the Mirae Asset Group case not as providing a business opportunity with significant profit or transactions under conditions substantially more favorable than normal, but as "transactions of considerable scale conducted without rational consideration or comparison." Through this, it concluded that the controlling family obtained unfair benefits. This is the first case where the act of providing unfair benefits to related parties solely by support of considerable scale was applied.

The FTC found that each Mirae Asset affiliate did not objectively or rationally consider or compare the golf courses and hotels they intended to transact with, but at the group level, set the principle of transacting with Blue Mountain CC and Four Seasons Hotel, operated by Mirae Asset Consulting, or effectively forced such transactions. Decision-making was made not by each affiliate but through the intervention of Mirae Asset Capital. As evidence, the FTC cited Mirae Asset Capital’s management of group affairs during the violation period, auditing of affiliates, performance evaluations, and operation of the group purchasing task force (TF).

During the 2 years and 7 months that Mirae Asset Consulting leased and operated Blue Mountain CC, the scale of transactions between affiliates and Blue Mountain CC amounted to 29.7 billion KRW, and with Four Seasons Hotel, 13.3 billion KRW, totaling 43 billion KRW. This represents a significant scale, accounting for 23.7% of the total sales (181.9 billion KRW) of Blue Mountain CC and Four Seasons Hotel during the relevant period.

Mirae Asset Group maintains the position that "Mirae Asset Consulting was operating at a loss and there was no support effect," but the FTC's judgment differed. Jung Jin-wook, Director of the FTC’s Corporate Group Division, emphasized, "Both the golf course and hotel businesses require large investments and bear heavy fixed costs, and due to fierce competition, it takes a long time to recover investments, making rapid stabilization difficult. However, in the case of Blue Mountain CC, due to affiliate sales accounting for about 72% during the peak of the violation in 2016, it was able to turn a profit within three years after opening in 2013."

Hanwha Group, SPC, Kumho Asiana, and others, who are under FTC investigation for similar allegations, are closely watching the background of this decision. Hanwha Group, which recently received an examination report (equivalent to a prosecutor’s indictment) from the FTC, is accused of funneling work to Hanwha S&C, an IT service company wholly owned by the three sons of Chairman Kim Seung-yeon. Kumho Asiana is under investigation for unfair support, and SPC, which faced controversies over illegal dispatch of bakers and wage suppression, is being investigated for unfair internal transactions.

This content was produced with the assistance of AI translation services.