From
Send to

FTC warns tougher rules on holding firms reliant on intragroup dealings

July 3, 2018 - 14:43 By Shin Ji-hye
South Korea’s antitrust watchdog said Tuesday it found 18 holding companies of conglomerates generated income more from brand royalties, rental properties and consulting fees than dividend income. 

The main source of holding companies’ income should be dividends from their affiliates but they generated income from other sources for the benefit of their controlling families and as a means to tighten their grip on power, according to the Fair Trade Commission. 
(Yonhap)


The FTC found holding companies of Booyoung and Celltrion had no dividend income from affiliates, while LG, CJ, Hanjin Kal and Kolon’s dividend income was less than half of their total income. 

The holding companies also increased the number of affiliates and generated significant income from intergroup dealings, unfairly expanding the power of their controlling families, according to the government. 

The portion of holding firms’ intragroup dealings stood at an average of 55 percent of their total dealings, according to the government. All of them were also private contracts, which are vulnerable to being monitored or controlled from outside.

“We found regulations should be improved to prevent the misuse of holding companies. We will make plans to improve related laws in line with the overhaul of the fair trade law,” said Shin Bong-sam, chief of the FTC’s business group division.

By Shin Ji-hye (shinjh@heraldcorp.com)