Korea Fair Trade Commission (KFTC), Thorough Correction of Unfair Inside Transaction of 6 Groups

On July 30, Korea Fair Trade Commission (KFTC) said through business report submitted to National Policy Committee “We will put right thoroughly if an unfair insider transaction is found as the result of investigation for the top-six groups.”

Attacking the investigation period and method of KFTC for 6 groups and 80 affiliates such as Samsung, LG, SK, Hyundai Motor, Hyundai, Hyundai and Heavy Industries, the industries will repel seriously.

These groups must hand out the related documents on insider transactions to the KFTC until August 3.

The KFTC said “We will operate the system steadily and prevent a distortion of corporate governance through restricting a voting right for investments which exceeds the limit of total investments. We will concentrate on a Market discipline through investigating the actual condition of inside transaction proclamation, and if the unfair inside transaction is found, we will investigate thoroughly and put right.”

Shin Jong-ik, the executive director of the Federation of Korean Industries insisted “I don’t understand why the KFTC performs the ‘net’ investigation before election even though any special suspicion is not found. The KFTC must interrupt the investigation immediately as foreign investors have interests.”

Choi Seung-no, the head of corporate research, Center for Free Enterprise said “Arbitrary selection and investigation on cases influenced on the corporate management of the government can be subject to the problem.” It is indicated that the investigation period can be the issue but the unfair inside transaction investigation doesn’t have legality on procedures.

Besides, in the relation to KT shares acquisition of SK Telecom in the report, the KFTC said “If the SK Telecom participates in the KT management, the market share of mobile market will increase to 86%. So, SK Telecom would monopolize the market. However, it is not a problem because KT equities of SK Telecom decreases to 9.55% owing to 1.79% disposal of EB.”

However, the KFTC added, “If the SK Telecom exercises a supremacy through joint and several responsibility of executives or concurrent position of executives, we will take a proper measure.”

Yeon-Su Shin Joong-Hyun Park ysshin@donga.com sanjuck@donga.com