The Fair Trade Commission vowed to take stern disciplinary measures against conglomerates for irregular business practices during its report to President Park Geun-hye on Wednesday.
The antitrust regulator, which has already pledged to crack down on unfair intragroup trading among conglomerate-based affiliates, said it would also introduce the system of class action lawsuits by pushing for a Competition Law revision in June.
“Enterprises including financial firms engaging in cartel practices will be the main target of the coming class action system,” the FTC said in its paper for the policy briefing.
Like the nation’s securities-related class action system, policymakers are benchmarking the cartel-related lawsuit system of the United States.
Price fixing among big firms has been rampant in the local market despite a series of fines and administrative penalties from the FTC on rule violators.
“About 43 percent of price-fixing cases over the past three years will be the target of the coming class action,” said the regulator.
It estimated that 45 million consumers of life insurance firms would be allowed to file for damages, as well as 25 million of the soju makers and 24 million for the dairy product industry.
President Park instructed the FTC officials including new chairman Noh Dae-lae to root out unfair practices committed by large companies against small ones and restrict the big firms’ monopolistic behavior or illicit wealth transfer to owners.
But she clarified that her administration’s policies are “not designed to suffocate a particular side (the conglomerate sector).”
Park said the “economic democratization,” pushed by the government, should be regarded not as a tool to regulate enterprises but as a new framework to “induce their change toward shared growth.
“Policies should be carried out step by step by minimizing side effects. While (the government will have to) foster merits of conglomerates, improper practices must be weeded out for shared growth-oriented business culture,” she told the regulatory officials.
For the crackdown on irregular intragroup trading, the FTC said it plans to reestablish the special department in charge of investigations into family-owned business groups, such as Samsung, Hyundai Motor, SK and LG.
The FTC did not operate the chaebol-crackdown department during the Lee Myung-bak administration, which had adopted a “business-friendly” policy.
While the regulator vowed to turn up the heat on the conglomerate sector for its lopsided funding among their subsidiaries in a bid to protect small and mid-sized subcontractors, it has decided not to introduce the so-called “30 percent rule.”
The FTC had sought to reprimand chaebol owners who hold more than a 30 percent stake in a business unit engaging in unfair intragroup funding.
Thanks to the scrapping, owners of 112 subsidiaries of 22 chaebol business groups such as Samsung Everland and Hyundai Glovis could evade closer supervision of the FTC.
By Kim Yon-se (kys@heraldcorp.com)
