Baek Byung-yeul is a journalist at The Korea Times focused on cultural content, including films and cultural events in South Korea. You can contact him at baekby@koreatimes.co.kr to share your insights.
Mirae Asset fined $3.5 mil. for unfair intra-group transactions
Chung Jin-wook, director general of business cooperation bureau at the Fair Trade Commission, announces the penalty for Mirae Asset Financial Group for unfair business practices, Wednesday. / Yonhap
By Baek Byung-yeul
Chairman Park Hyeon-joo avoids criminal charges
By Baek Byung-yeul
Mirae Asset Financial Group Chairman Park Hyeon-joo / Courtesy of Mirae Asset Financial Group
The Fair Trade Commission (FTC) has fined Mirae Asset Financial Group 4.39 billion won ($3.5 million) for unfair intra-group transactions, the antitrust agency announced Wednesday.
The FTC said it imposed the penalty and correction order against Mirae Asset affiliates because the financial group's affiliates awarded contracts to the group's holding company Mirae Asset Consulting, helping the group founder and family members pocket profits.
Mirae Asset Consulting is an unlisted company of the group, with 91.86 percent of its stake owned by Park Hyeon-joo, the group's founder and chairman, and his family members. The amount involved in the unfair in-house deals was 43 billion won between 2015 and 2017, according to the FTC.
However, Park could avoid criminal charges because the agency did not refer him to the prosecutor. Chung Jin-wook, director general of the FTC's business cooperation bureau, said, “Park didn't make an order for an intra-group transaction.”
Mirae Asset Financial Group's headquarters in central Seoul. / Yonhap
In regard to a comment that the fine was much lower than experts' estimation, the FTC added that the penalty was meant to be 10 percent of the total transaction amount.
After the investigation, the antitrust agency found that Mirae Asset Consulting and other affiliates had been engaged in intra-group transactions worth 43 billion won, with Blue Mountain Country Club pocketing 29.7 billion won and Four Seasons Hotel 13.3 billion won.
The agency accused 11 Mirae Asset affiliates ― including brokerage firm Mirae Asset Daewoo and asset management firm Mirae Asset Global Investments ― of holding corporate events, running ads and buying gifts at the golf course and the hotel without a fair consideration process.
“Given the golf course and the hotel posted combined sales of 181.9 billion won during this period, the amount of the transactions accounted for 23.7 percent of their entire sales, which is enormous,” the agency said.
Chairman Park holds a 48.63 percent stake in Mirae Asset Consulting, with his wife and three children owning 34.81 percent and his relatives 8.43 percent.
The FTC added that the sanctions imposed on Mirae Asset would become a model case for countering large business groups' unfair intra-group transactions. The Fair Trade Act bans conglomerate owners from pocketing unfair profits from in-house transactions.
“Taking the Mirae Asset case as an example, we expect further unfair intra-group transactions among a business group's affiliates can be prevented and more transactions with small- and medium-sized enterprises will occur,” the antitrust agency said.