Fair Trade Commission's 5-Year Investigation of Hanwha... 'Ultimately No Charges'

Fair Trade Commission: "Difficult to Confirm Involvement of the Controlling Family; Insufficient Proof of Fair Market Price"
Hanwha: "Respect the FTC's Judgment"

[Asia Economy Reporters Joo Sang-don (Sejong), Park So-yeon] The Fair Trade Commission (FTC), which has been investigating Hanwha Group's 'unfair provision of benefits to related parties (private interest appropriation)' for five years, has ultimately concluded with a no-indictment decision. The reason cited was the difficulty in confirming the controlling family's involvement or instructions regarding unfair support, and insufficient proof of fair market prices for data services such as circuit usage fees. Despite focusing on Hanwha's private interest appropriation allegations for five years, the FTC's no-indictment decision has made it difficult to avoid criticism that the commission wasted administrative resources on an excessive investigation.

On the 24th, the FTC stated, "The commission decided to terminate the review procedure regarding Hanwha's application management service transactions due to difficulties in verifying facts about customary trading practices in the relevant market and the involvement or instructions of the group or related parties. Regarding data circuit and advertising service transactions, a no-indictment decision was made considering the lack of proof of fair market prices."

The FTC investigated from 2015 until May this year, concluding that Hanwha affiliates unfairly funneled work to Hanwha S&C (now Hanwha Systems), which was 100% owned by the three sons (Dong-gwan, Dong-won, Dong-seon) of Hanwha Chairman Kim Seung-yeon. Based on the results of the five-year investigation, the FTC sent a review report (equivalent to a prosecutor's indictment) to Hanwha Group on the 15th of the same month. The FTC judged that from January 1, 2015, to September 30, 2017, Hanwha affiliates conferred unfair benefits to related parties through transactions involving Hanwha S&C, which was 100% owned by related parties, in ▲application management services ▲data circuit services ▲advertising services. The Fair Trade Act prohibits conferring unfair benefits to related parties through transactions conducted on significantly favorable terms or without reasonable comparison at a substantial scale.

Subsequently, the FTC held a plenary session, which functions as a court, over two days on the 11th and 12th to deliberate on Hanwha Group's allegations of unfair benefit provision. However, the result of the deliberation was a no-indictment decision.

Regarding this FTC decision, Hanwha stated, "We respect the FTC's judgment and decision," and added, "Hanwha Group will continue to strive to establish a culture of fair trade and win-win cooperation."

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