Gov't will investigate internal trading

The Fair Trade Commission will begin investigating internal transactions at the nation`s top four business groups -- Hyundai, Samsung, LG and SK -- starting around the end of next month. Also, it will investigate state-run corporations` internal trading starting in October.

The FTC, which has completed investigations of seven out of 25 major business groups, reported that it would initiate an investigation of the top four conglomerates at the end of August and that it was now checking the business groups` massive internal trading posted under the Fair Trade Law.

The commission is studying ways to conduct investigations of the four leading groups as soon as the field examination of seven groups, including Lotte and Kumho, is completed. Therefore, it is likely that a formal investigation will be initiated about Aug. 21 and will be conducted through the end of September.

In addition, the FTC is expected to look into whether the four groups unfairly supported companies that were separated from the group or if they used venture companies as hidden subsidiaries for internal transactions and used them as means of illegal inheritance.

In 1998 and 1999, Samsung Group separated 273 companies, while LG, Hyundai and SK separated 83, 69 and 29 companies from their business units. They account for 88.7%, or 454 firms, of 512 companies separated from chaebol groups.

In particular, the FTC is planning to focus its investigation on companies with more than 20% stakes owned by the chaebol groups, although they failed to satisfy the 30% standard to be considered as subsidiaries.

In October, the FTC will inquire into the internal transactions of state-run corporations that have a number of subsidiaries. Among the companies that will be subject to FTC investigation are leading companies such as Korea Electric Power, Hanjung and Korea Telecom.