Samsung opens up bidding for in-company food service

Samsung Electronics' headquarters in Suwon, Gyeonggi Province / Courtesy of Samsung Electronics

By Baek Byung-yeul

In an apparent move to improve its compliance policy, Samsung Electronics has widened its scope of bidding for in-company food services currently provided by one of its affiliates.

The decision came after its in-company compliance committee recommended the group expand the openness of in-company cafeterias to outside food service providers. In June 2020, the committee advised Samsung Electronics and other affiliates to avoid private contracts when choosing meal service providers and to conduct competitive bidding to improve transparency in operations of the group.

In a statement released Wednesday, Samsung Electronics said it had requested bids for six in-company cafeterias, including in Suwon, Gwangju, Gumi and other locations across the country, following the opening of two in-house cafeterias in the first half of the year.

The bidding process is open to small- and medium-sized food service providers in an effort to achieve mutual growth.

“The primary target in the bidding is small- and medium-sized food service companies in sync with the company's moves toward a balanced growth strategy with our contractors. Additional points will be given to companies in areas where their services will be required,” the company said.

In June, the Korea Fair Trade Commission (FTC) fined five Samsung affiliates 234.9 billion ($203.2 million) for unfair business practices regarding in-company cafeterias. The fine was the largest imposed for unfair “business support.” Samsung Electronics, the crown jewel of the group, was specifically fined 111.2 billion won, the largest ever for a single company here.

At that time, the KFTC said Samsung Electronics and other affiliates unfairly supported Samsung Welstory to allow the group's food service affiliate to report sizable earnings.

Samsung Welstory is a wholly owned affiliate of Samsung C&T, the group's holding company in which Samsung leader Lee Jae-yong has the largest share. The FTC didn't acknowledge the allegation that the unfair business transaction between Samsung Welstory and other Samsung affiliates was directly involved with the management succession for Lee.

Regarding the fine, Samsung Electronics said, “there was no unfair support order and what management said at the time was provide the best meals, improve the quality of the meals and make sure there are no complaints from employees.'”

Since then, Samsung Electronics' two in-company cafeterias in Suwon and Giheung have been run by an outside food services provider that was chosen through a competitive bidding process. The company said it will continue to seek outside companies to run its in-company restaurants.