Published : Nov. 6, 2015 - 22:46
Authorities are poised to slap sanctions on Samsung Group for violating equity investment regulations when it merged Samsung C&T with Cheil Industries in September.
The Fair Trade Commission said Friday it was investigating whether the merger deal has created any new cross-shareholdings among Samsung affiliates or strengthened their existing cross-shareholding structure.
(Yonhap)
The current antitrust rules prohibit conglomerates from creating a new circular ownership among affiliates through equity investments.
Following the merger, Samsung C&T, the group’s de facto holding company, holds stake in Samsung Life Insurance, which in turn holds stake in Samsung Electronics that holds stake in Samsung Electro-Mechanics, which ultimately is a stakeholder in the merged entity.
If the authorities confirm a violation in the probe, Samsung will be issued immediate sanctions or given a six-month grace period to disassemble the offending investment structure.
“The decision will be announced soon,” the FTC said in a statement.
The agency, however, would not reveal how many cross-shareholding structures it has found for now, so as not to affect stock prices of the companies.
In June when Elliott Associates attacked Samsung to block the merger, the U.S. hedge fund claimed the deal could create five new cross-holdings.
At the time, Samsung also made an official request asking for the FTC’s opinion.
Depending on the watchdog’s final decision, Samsung could be forced to sell off up to trillions of won in stakes across affiliates to alter the new circular ownership structure.
“We have not yet received any notice from the FTC. We will comply with their decision,” said a Samsung spokesperson.
After a fierce proxy battle with Elliott, the merger deal won the approval of shareholders in July. The new entity, succeeding the name Samsung C&T, kicked off on Sept. 1 as the umbrella company of Samsung Group.
Samsung Electronics and Samsung Life Insurance are responsible for tech and finance pillars, respectively under the roof of Samsung C&T, which also oversees the group’s construction, trading, fashion, food and bio businesses.
By Kim Jihyun and Lee Ji-yoon (
jemmie@heraldcorp.com) (
jylee@heraldcorp.com)