Kolmar fined for illegally assisting company owned by chairman's daughter

Kolmar BNH's factory in Sejong / Courtesy of Kolmar BNH

A subsidiary of Kolmar BNH has been fined for assisting a company owned by the daughter of Kolmar Korea Chairman Yoon Dong-han, the nation's top antitrust agency said Monday. It said the firm was able to gain a competitive advantage over its rivals due to the unfair support from the Kolmar affiliate.

According to the Fair Trade Commission (FTC), HNG was ordered to pay 510 million won ($370,000) in fines for providing undue support to its former subsidiary, KB Lab.

HNG is an affiliate of Kolmar BNH, which manufactures and distributes bio products.

Established in 2016 as KB Lab, the firm was owned by Kolmar BNH CEO Yoon Yeo-won, daughter of the Kolmar chairman, before it was sold to a third party in December 2020 and changed its corporate name to Weerye.

An investigation by the FTC found that HNG dispatched some of its staffers to KB Lab for around four years since 2016. HNG paid their labor costs worth about 900 million won instead of KB Lab, which only paid 72 million won for the costs during the same period.

The FTC said the company breached the nation's fair trade act, as KB Lab was able to gain a more favorable position in its sales activities than its rivals due to the unfair financial and human resources support from HNG. The company took advantage of HNG's human resources, and conducted its sales acts from more favorable circumstances than its competitors, according to the FTC.

KB Lab's sales also skyrocketed during the period. It chalked up sales of merely 42 million won, but the figure surged to 2.5 billion won in 2019.

The FTC also ordered HNG to rectify such unfair practices.

"We have caught the unfair supporting acts from the family-controlled medium-sized company," an official from the FTC said. "The watchdog will continue stepping up monitoring on such undue supporting activities for medium-sized enterprises which are in a blind spot of the market surveillance structure here."

An HNG spokesperson said the firm will do its best not to get involved in any similar cases down the road.

"HNG will make efforts not to be caught with any similar kind of controversies," the official said, declining to comment further.