The Fair Trade Commission is zeroing in on the nation’s major advertising agencies and portal operators in its extensive probe into conglomerates’ alleged unfair business practices in deals with small firms.
The antitrust regulator said Wednesday that it had launched an inquiry into Cheil Worldwide Inc., an advertising unit of Samsung Group, on suspicions that it forced price cuts or delayed payment in deals with its subcontractors.
On Tuesday, the FTC sent a team of inspectors to the headquarters of the nation’s largest advertising company in Hannam-dong, central Seoul, to secure data on its trading with subcontractors.
FTC officials said the investigation will be focused on whether the company engaged in unfair business practices, such as bullying their subcontractors and irregular intra-group trading.
One of the major unfair practices widely committed by big companies is to apply pressure to suppliers to slash prices of manufacturing or design-related components.
Since taking office in February, President Park Geun-hye has vowed to put an end to big firms’ abuse of their market dominance in business deals with small subcontractors.
Another investigation focus could be the advertising agency’s possible cross-affiliate deals with several subsidiaries under the conglomerate.
According to the Financial Supervisory Service, Samsung C&T Corp. holds a 12.6 percent stake in Cheil Worldwide, followed by Samsung Card with 3 percent and Samsung Electronics with 2.6 percent.
A Cheil Worldwide spokesman said the company will sincerely cooperate with the probe.
Some market insiders raised the possibility that the FTC will widen the scope of its investigation to the overall advertising agency industry, which involves the No. 2 player Innocean Worldwide, a unit of Hyundai Motor Group.
Early this week, the FTC launched its probe into NHN Corp., the operator of the nation’s largest portal Naver. The NHN probe is designed to look into whether the company hampered the fair trade market by exploiting its dominant position in a variety of sectors.
Five years ago, the regulator levied fines of 227 million won ($206,000) against NHN for violating the fair competition law.
The FTC, however, denied some news reports that it is set to conduct inquiries into some of the 50 major foreign manufacturers operating in Korea, such as Korean units of Apple Inc., Google, Coca Cola and Nike, on similar suspicions.
In its statement, the FTC dismissed the report as untrue, claiming that it has yet to decide whether to launch a probe into the foreign business community to look into whether they conducted business deals with their subcontractors in a fair manner.
By Kim Yon-se (
kys@heraldcorp.com)
