South Korea’s antitrust watchdog renewed a probe into Hite Jinro Co., a leading beer and distilled rice liquor soju manufacturer in the country, for having allegedly disturbed antitrust agency’s earlier investigation on unfair practice of commissioning business orders to a supplier affiliated to the owner family.
According to industry sources on Wednesday, Fair Trade Commission launched an investigation into Hite Jinro upon speculating that the liquor manufacturer interfered with the antitrust agency’s earlier probe on internal transaction allegation in the company by refusing to hand in requested information and even stashing away important documents. The agency suspected that the illegal action was done not only at the individual employee level but in more organized manner involving head office.
The FTC conducted investigation into Hite Jinro in April after finding that the company unfairly favored its subsidiary Seoyoung E&T Co. by placing orders to the subsidiary to build liquor manufacturing equipment. Seoyoung E&T is an unlisted company that manufactures beer brewing gears and canisters, and Hite Jinro’s owner family including Chairman Park Mun-deok holds a total 99 percent stake in the manufacturer.
Hite Jinro was placed on the FTC’s large conglomerate watch list as its asset size has reached 5.5 trillion won ($4.9 billion) as of September this year.
Under Korea’s antitrust guidelines, companies whose assets exceed 5 trillion won have to join the watch list of conglomerates, meaning that they will be subject to tougher antitrust regulations, such as prohibition of cross shareholding ties among affiliates, new circular equity investment, inter-affiliate debt guarantee and stricter disclosure rules under the Fair Trade Act.
The FTC’s investigation team recently submitted a proposal restricting Hite Jinro’s excessive internal trading with its subsidiary to a review board.
Shares of Hite Jinro finished Wednesday at 25,200 won, up 2.23 percent from the previous session.
By Boo Jang-won
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]