Criticism of 'Ilgam Molaeju-gi'... Samsung, Hyundai Motor, etc., Open Group Meal Services for the First Time in 25 Years

Fair Trade Commission Holds 'Group Meal Service Open Tender Declaration Ceremony' with 8 Major Conglomerates
FTC's Main Target is Samsung Group... Begins Sanctions for Unfair Support of Samsung Welstory

[Sejong=Asia Economy Reporter Kwon Haeyoung] Eight major conglomerates including Samsung, Hyundai Motor, and LG have decided to fully open up the cafeteria service contracts that they had been awarding exclusively to their affiliates and related parties for nearly 25 years. As the group meal service market worth 4.3 trillion KRW is gradually opened, the long-standing monopoly structure is expected to be broken, allowing independent companies to compete through bidding.

◆ Fair Trade Commission's 'Exclusive Contracting' Criticism Leads 8 Major Conglomerates to Fully Open Group Meal Services ＝On the 5th, the Fair Trade Commission along with eight major conglomerates?Samsung, Hyundai Motor, LG, Hyundai Heavy Industries, Shinsegae, CJ, LS, and Hyundai Department Store?held a 'Group Meal Service Contract Opening Ceremony' at LG Science Park in Magok, Seoul. The ceremony was attended by Fair Trade Commission Chairman Cho Sung-wook, Samsung Electronics CEO Kim Hyun-suk, Hyundai Motor CEO Jang Jae-hoon, LG Vice Chairman Kwon Young-soo, and other CEOs of major conglomerates, who all pledged to open up group meal service contracts.

The group meal service market is dominated by the top five companies?Samsung Welstory, Ourhome, Hyundai Green Food, CJ Freshway, and Shinsegae Food?which together account for 80% of the total market worth 4.3 trillion KRW. All of these companies are affiliates or related parties of the 15 largest conglomerates. These companies have declared that they will sequentially open up the cafeteria service contracts that they had previously awarded exclusively to their affiliates.

A Fair Trade Commission official explained, "The top five group meal service providers secured stable contracts through private agreements with affiliates and related parties, dominating most of the market, and this trading practice has continued for nearly 25 years. As a result of encouraging conglomerates themselves to break away from the entrenched internal trading practices with affiliates or related parties, eight major conglomerates have made a decisive decision to open up their contracts."

Through this opening of group meal service contracts, contracts worth 1.2 trillion KRW will first be converted to competitive bidding sequentially. Under the principle of full opening, LG plans to sequentially open more than 40 million meals within the group, and CJ will open more than 65% (3.7 million meals). Participating conglomerates will first open contracts for small-scale facilities such as dormitories and research institutes next year, totaling about 10 million meals, and plan to gradually expand the scope to large-scale workplaces in the future.

◆ Fair Trade Commission's Main Target is Samsung... Initiates Sanctions for Unfair Support ＝Since establishing the Corporate Group Division in September 2017, the Fair Trade Commission has actively worked on restructuring the group meal service market, with the main target being Samsung Welstory, the industry leader. According to the Fair Trade Commission, as of 2019, Samsung Welstory had group meal service sales of 1.2197 trillion KRW, accounting for 28.5% of the total market (4.2799 trillion KRW), the highest market share. Following were Ourhome (17.9%), Hyundai Green Food (14.7%), CJ Freshway (10.9%), and Shinsegae Food (7%).

A Fair Trade Commission official stated, "Samsung Electronics operated its own cafeteria when the Giheung plant was established in 1983, but since 1997, it has continued to contract privately with Samsung Everland (now Samsung Welstory). Samsung Welstory, established in December 2013 through a physical division from Samsung Everland, has grown to become the industry leader through internal transactions with affiliates such as Samsung Electronics, Samsung Display, and Samsung Electro-Mechanics."

For this reason, the Fair Trade Commission recently filed a complaint with the prosecution against Samsung Group affiliates for unfairly supporting Samsung Welstory and sent a review report to Samsung indicating the intention to impose fines. According to the Fair Trade Commission, Samsung Electronics' private contract volume for group meal services last year was about 52.4 million meals annually, amounting to approximately 440 billion KRW.

A Fair Trade Commission official emphasized, "We plan to regularly disclose the results of contract openings in cooperation with participating conglomerates and strive to gradually expand the scope of opening. We will continue efforts to identify and improve the closed internal trading practices of conglomerates, focusing on industries closely related to citizens' daily lives and key industries for small and medium enterprises."

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