Fair Trade Commission Launches Full-Scale Sanctions on Harim's 'Preferential Treatment'... Expected to Conclude by March This Year

Final Judgment Four Years After Investigation Began

[Sejong=Asia Economy Reporter Joo Sang-don] The Fair Trade Commission (FTC) is expected to make a final judgment in March this year regarding allegations of unfair internal transactions involving the Harim Group and its chairman. Following the recent outcome of an administrative lawsuit filed by Harim, the FTC is likely to decide on the legality of the case four years after the investigation began.

On the 13th, the Seoul High Court ruled partially in favor of the plaintiff in a lawsuit filed by the Harim Group challenging the FTC’s review process, which sought to cancel the refusal to allow inspection and copying of documents.

The FTC began investigating Harim’s alleged unfair internal transactions in 2017 and sent a review report in December 2018, stating that it would file a criminal complaint against Kim Hong-guk, chairman of the Harim Group. However, Harim filed an administrative lawsuit demanding the disclosure of data related to the fair price in the review report. The FTC had refused, citing concerns that trade secrets of other companies might be exposed. Following this ruling, Harim will now be able to inspect some of the previously undisclosed documents.

With the administrative lawsuit now settled, the FTC plans to hold a plenary meeting as soon as possible, but considering other case schedules, the review of the Harim case is likely to take place in March.

The FTC believes that Harim unfairly supported 'Olpum,' an unlisted company wholly owned by Kim Jun-young, the eldest son of Chairman Kim, by mobilizing its affiliates. After Chairman Kim transferred 100% of Olpum’s shares to Kim Jun-young in 2012, Harim affiliates traded with Olpum at prices higher than fair market value, helping Olpum gain undue profits. According to the Financial Supervisory Service’s electronic disclosure system, as of the end of September last year, Olpum holds a 4.36% stake in Harim Holdings, which is at the top of the Harim Group’s corporate structure.

The key issue in determining whether unfair internal transactions occurred is the appropriateness of the 'fair price calculation,' which Harim demanded be disclosed through the administrative lawsuit. Transactions under 'significantly favorable conditions' are subject to sanctions for private benefit appropriation, with the fair price serving as the standard for this judgment. If the prices in transactions between Harim affiliates and Olpum are excessively higher than the 'general market price,' they become subject to sanctions for private benefit appropriation.

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