Hoban Construction Finalized with 24.3 Billion Won FTC Fine for 'Unfair Internal Transactions'

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Hoban Construction, which had been fined 60.8 billion won by the Fair Trade Commission (FTC) for 'unfair internal transactions,' filed a lawsuit in protest but ultimately lost, confirming a fine of over 20 billion won.

The Supreme Court's Third Division (Presiding Justice Lee Heungku) on November 20 upheld the lower court's ruling that partially favored the plaintiff in the appeal trial filed by Hoban Construction against the FTC's corrective order and fine payment order.

The FTC imposed a total fine of 60.8 billion won on Hoban Construction on June 15, 2023, for violating the Monopoly Regulation and Fair Trade Act (Fair Trade Act).

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The reason was that Hoban Construction had unfairly supported subsidiaries and affiliates owned by Chairman Kim Sangyeol's eldest son, President Kim Daehun, as well as Hoban Industry and its subsidiaries owned by his second son, Executive Director Kim Minseong.

The Supreme Court found that Hoban Construction's provision of PF loan payment guarantees free of charge, thereby assuming credit risk, was a highly unusual case but considered it a customary business practice. The court also determined that because Hoban Construction did not receive a significant guarantee fee from the sons' companies, this constituted an act of unfair support.

The court recognized the intention to provide benefits, noting that Hoban Construction offered opportunities for apartment development projects without receiving separate compensation, and took into account that the beneficiary companies were run by the chairman's sons. However, the Supreme Court ruled that the resale of public land at the supply price was not illegal, and that the amount provided by waiving the bid application fee was negligible and could not be regarded as an 'excessive economic benefit,' thus not constituting an act of unfair support.

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