Daelim referred to prosecution for unfair biz practices

By Kwak Yeon-soo

Lee Hae-wook, the chairman of Daelim Group

Korea's Fair Trade Commission (FTC) has fined and referred Daelim Group to the prosecution for alleged unfair business practices favoring its affiliates.

Korea's antitrust watchdog said Thursday it has fined Daelim Industrial and its affiliates Ora Resort and A Plus D (APD) a combined 1.3 billion won ($1.1 million) for rigging bids for hotel projects.

Daelim Industrial is accused of pressing Ora Resort to grant APD a lucrative business opportunity to construct the GLAD hotel brand.

In 2013, Daelim Industrial developed its own hotel brand named GLAD and made the real estate developer APD register it as its trademark.

GLAD Hotels and Resorts ― a wholly owned subsidiary of Daelim Industrial ― signed a deal with APD in 2015 to provide regular payments for the use of the GLAD brand.

Although APD had not provided adequate brand marketing services to Ora Resort, the real estate developer received about 3.1 billion won worth of brand commission fees from January 2016 to July 2018, according to the FTC.

It turned out that the practice increased the personal wealth of the families that own the conglomerates.

Lee Hae-wook, the chairman of Daelim Group, and his son each owned a 55 percent and 45 percent stake in APD before giving all of the shares to Ora Resort in August last year. The shares combined were worth 4.5 billion won.

“They contracted too much work to their own affiliates, which undermines fair and open competition,” a FTC official said.

The latest measure “is meaningful because it's the first case to crack down on unfair practices of conglomerates and their subsidiaries,” the commission said, adding it will continue to tackle issues hampering fair competition.

The investigation also comes after a revision in the law that allows the commission to inspect any affiliate in which members of the conglomerate-owning family have more than a 20 percent stake in the affiliate regardless of whether the affiliate is listed or not.