Supreme Court Cancels Fair Trade Commission Fines

The Fair Trade Commission lost its lawsuit related to the under-priced purchase of Samsung SDS preemptive rights by insiders and privileged investors such as Samsung Electronics’ Lee Jae-yong.

In its second day of deliberations on September 24, the Supreme Court (High Chancellor Kim Yong-dam) decided on the original judgment that was given in favor of the complainant related to the lawsuit brought up by Samsung SDS against the Fair Trade Commission connected to the cancellation of the correction order concerning unfair internal transactions.

Accordingly Samsung will receive the 15.804 billion won fine they have already paid.

The court in its ruling announced, “It is difficult to conclude that because of the chance that the succession of wealth through generations and the concentration of economic power in a single, special related group of people is possible, fair trade is threatened.”

In 1999, Samsung SDS issued 23 billion worth of BW to six executives of Samsung , including the eldest son of Samsung chairman Lee Kun-hee, Lee Jae-yong, at prices lower that the market price.

The Fair Trade Commission regarded this as an “unfair internal transaction” and imposed a fine of 15.804 billion won with a correction order, but Samsung SDS objected to the order and brought up a lawsuit.

Because the Fair Trade Commission’s restrictions on supporting insiders and special related people have been curbed by the court, it is believed that the Fair Trade Commission’s unfair transaction supervisory function will now dwindle.

jin0619@donga.com