Intra-group trading grows further

Transactions among affiliated companies of the nation’s major business groups have increased again this year, with most of the deals being made without fair competition, the state-run antitrust watchdog said Thursday.

The Fair Trade Commission said it would toughen surveillance on whether any unfair favors were given to their subsidiaries, especially in system integration, logistics and advertising sectors.

According to the FTC report, the nation’s 46 conglomerates 1,407 trillion won ($1,240 billion) in sales this year, of which 186.3 trillion won, or 13.2 percent, came from inter-subsidiary dealings.

When it comes to the top 10 business groups with owners, the ratio of intra-group deals was slightly higher at 14.5 percent, up 1.3 percent from 2011, the FTC said.

STX Group posted the largest ratio of 27.6 percent, followed by SK Group with 22.1 percent and Hyundai Motor Group with 20.7 percent.

In terms of actual value, Samsung posted the highest amount of 35.3 trillion won, followed by SK with 34.2 trillion won and Hyundai with 32.2 trillion won.

The inter-affiliate trading at the nation’s top five conglomerates ― Samsung, Hyundai, SK, LG and POSCO ― amounted to 132 trillion won, making up 70 percent of the total among 46 business groups.

FTC officials said that companies where owner family members owned more takes showed a bigger ratio of internal deals. More than half the deals were paid in cash, while 90 percent of the transactions were made without an open bidding.

The FTC said the research was carried out based on the public disclosure data announced by 1,373 subsidiaries of the nation’s 46 large conglomerates.

Companies are required to submit the details of their product and services transactions to the Financial Supervisory Service every year.

Even though intra-group deals are not legally banned, the government has stepped up efforts to restrict the prevalent practices as they can lead to unfair competition with non-affiliated companies.

With the nation’s economic dependence deepening on the few conglomerates, the FTC has strengthened monitoring on them as part of its initiative for the shared growth between large companies and their smaller partners.

“We need to continue to watch sectors and companies where the intra-group deals are made frequently or affiliated companies are likely to receive some favors from their sister firms,” said an FTC official. 

By Lee Ji-yoon
(jylee@heraldcorp.com)