 |
| Fair Trade Commission Chairman Kim Sang-jo explains to reporters the latest proposed revision to a law regulating family-run conglomerates' business transactions with their subsidiaries and affiliates at the Sejong Government Complex, Sunday. Yonhap |
By Park Hyong-ki
The country's antitrust regulator will expand the scope of its measures restraining family-owned conglomerates from excessively outsourcing contracts or assigning work to subsidiaries and affiliates.
Fair Trade Commission (FTC) Chairman Kim Sang-jo on Sunday revealed a proposal for a revised bill enabling it to restrict intra-group business transactions of both listed and unlisted companies in which chaebol own more than a 20 percent stake.
Previously, it kept in check chaebol that owned stakes larger than 30 percent in listed companies or 20 percent in unlisted companies.
The FTC chief also explained to the press that the revision will include monitoring and regulating companies doing businesses with their subsidiaries in which the parent companies hold more than a 50 percent controlling stake.
The expansion of the restrictions on intra-group transactions will have the FTC watch 607 companies, up from the current 231, it noted.
Companies such as Samsung Group's Samsung Life Insurance, Hyundai Motor's Innocean ad agency and Hyundai Glovis and SK Group's SK D&D, an energy storage system company, are expected to face tough FTC scrutiny after the passage of the revision.
"We will listen carefully to lawmakers on this bill and seek to lay the foundation to create a healthy, transparent, fair and competitive environment," Kim said in a press briefing, adding this is part of the government's efforts to promote innovate growth.
This marks the first time in 38 years for the FTC to propose an amendment to the antitrust law on the business practices of chaebol, it added.
Kim, a former economics professor nicknamed the chaebol sniper, has prioritized reforming conglomerates to root out their malpractices and abuse of power.
He has criticized the conglomerates' internal transactions with their subsidiaries and affiliates, saying such deals have increased the wealth of chaebol while further hurting their small suppliers.
Also, the revised bill will force conglomerates that seek to transform into holding companies to increase the holding companies' ownership in their affiliates by 10 percentage points.
The holding companies will have to own at least a 30 percent stake in their listed affiliates from the current 20 percent, and a 50 percent stake in their unlisted companies from 40 percent, the FTC said.
This is part of efforts to curb chaebol influence over those companies in which family members hold few shares through the holding companies. In other words, if they want to control the companies, they should increase their ownership.
In June, FTC Chairman Kim called on chaebol to sell off their stakes in their affiliates that were unrelated to their core businesses, or otherwise face strong regulations and penalties.
![[ANALYSIS] Pandemic awakens demand for data-driven automation](https://img.koreatimes.co.kr/upload/thumbnailV2/2b05d621a193420abef7ee24b95eab3d.jpg/dims/resize/178/optimize)
