FTC to review Samsung self-dealing in cafeterias

South Korea’s antitrust watchdog will meet to weigh the penalties to impose on Samsung Group later this month over accusations that it has unfairly favored one of its subsidiaries for in-house cafeteria businesses.

The Fair Trade Commission will hold a two-day meeting sometime around May 26 and hear opinions from major Samsung subsidiaries before finalizing the level of punishment, according to industry sources.

Though the meeting often takes a day with all nine members present including the chairman, it will take an additional day to review the latest case as it involves many parties and accusations, with heated debate between the watchdog and Samsung’s side also expected.

The move comes after Samsung Welstory, the largest on-site food service provider in the country by revenue and a fully-owned subsidiary of Samsung C&T, was accused of receiving special treatment from the group’s other subsidiaries.

The accusations surrounding the conglomerate prompted the FTC to launch an investigation in 2018.

Earlier this year, the watchdog sent a report to Samsung after a review, informing the company of its decision to report Samsung Electronics and Samsung SDI to the prosecution. The move, however, did not target Lee Jae-yong who is the apparent heir of Samsung Group as well as Samsung C&T.

The annual sales of Samsung Welstory stood at 1.97 trillion won ($1.76 billion) in 2020. Some 440 billion won is thought to have been generated from a private contract signed with Samsung Electronics.

In 2019, 38.3 of its sales were thought to have been generated from working with Samsung Group subsidiaries.

Following criticism, the FTC and eight major conglomerates -- including Samsung Electronics, LG and Hyundai Motor -- agreed to open up its in-house cafeterias and last month launched a new competitive bidding system to allow small and mid-sized operators to take part.

By Yim Hyun-su (hyunsu@heraldcorp.com)