The Fair Trade Commission fined LG Electronics 1.9 billion won ($1.78 billion) for having pressured its smaller sales branches for built-in home appliances to agree on joint guarantees against failed payments of delivered goods, the country’s anti-trust agency said on Wednesday.

The FTC’s investigation revealed that from June 2008 to the end of last year, LG Electronics had been abusing its status as a large home appliance manufacturer to demand joint liability for due payments.

The FTC found 441 cases of such fraud across 29 branches, worth some 130.2 billion won. It was revealed that this had been an act prompted by LG Electronics’ hope to ease potential bankruptcies once the company’s insurances could not cover all the losses from builders.

Since 2008, LG Electronics has subscribed to insurance to cover possibly failed payment by builders as the overall construction sector suffered a slump, raising worries over their bankruptcies.

But the company later started to transfer the responsibility for recouping money to its smaller sales branches amid a growing number of cases where the insurance could not cover the losses from construction firms with poor credit ratings, the FTC said.

The FTC said it issued a correction order along with the fine.

(jhk@heraldcorp.com)