April 27, 2024

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[THE INVESTOR] Korea’s corporate watchdog said on Oct. 15 that it will focus on reforming family-controlled business groups and promoting fair business practices.

In a report to the National Assembly, the Fair Trade Commission said it aims to help foster innovation-led growth, as well as expand consumers’ rights.

The FTC said it plans to carry out probes into the practices which are blamed for allowing founding families of private conglomerates, called chaebol, to easily net large profits by having subsidiaries award lucrative contracts to each other, undermining the principle of fair competition.

The watchdog said it plans to unveil detailed data on their holding company structures, debt guarantees among affiliates and ownership structures before the end of the year.

The antitrust watchdog will also implement laws regarding subcontracting and franchise businesses in a way that helps better protect subcontractors and franchisees.

The FTC stressed that creating a level playing field for small and medium-sized companies is very important in a country where chaebol companies have dominated the economy for decades.

Punitive damages of up to three times the actual losses incurred by illegal business practices, such as unfair payments and returns, as well as cutting back supplied goods, will be imposed.

Franchisers are required to pay damages stemming from any wrongful actions they have taken or other irregularities to their franchises, with such revised rules set to take effect early next year, according to the FTC.

The corporate regulator said it will improve the market structure in a way that facilitates innovation-led growth, by seeking deregulations for the ICT, health care and other new promising sectors.

The corporate watchdog also said it plans to strengthen crackdowns on antitrust business activities, with a focus on the financial derivatives and imported electric parts markets.

By Song Seung-hyun and newswires (ssh@heraldcorp.com)