Top groups pledge fairness, support for small firms

Samsung, Hyundai Motor, LG and SK agree with FTC to boost SME access


Samsung, LG, Hyundai Motor Group and SK have agreed to refrain from in-house transactions and share more business opportunities with smaller firms through competitive bids, antitrust authorities said Monday.

Fair Trade Commission chairman Kim Dong-soo met with the groups’ top executive officials on Monday to announce their shared-growth agreement especially in the sectors of system integration, advertising, construction and logistics.

Samsung and Hyundai Motor will open competitive biddings in all the four sectors from the second quarter of the year. LG and SK have opted out of the agreement in logistics, but plan to carry out the agreement in phases when they select new contractors for advertising, construction and systems integration.

They will also extend or create their own supervisory committees to secure transparency in their inter-subsidiary trading. 

“The widening gap between large and small firms is getting more apparent recently. It is major progress that the nation’s four largest groups have agreed to open more opportunities for smaller businesses,” said the chief of the antitrust regulator.

Inter-subsidiary deals are widespread in large Korean companies, deepening concentration of economic power at top-tier groups while weakening small and medium-sized businesses’ competitiveness.

In a FTC survey conducted last year, inter-subsidiary trading made up 71 percent of transactions at the nation’s top 20 companies. Of them, 88 percent were private contracts made without competitive bidding.

When it comes to the top four conglomerates, more than 80 percent of their business deals were carried out among their affiliates, the FTC found.

“Increased business opportunities are expected to help the growth of non-affiliated but competitive companies. I hope the move of the four biggest companies to lead the other top 30 businesses,” Kim said.

The groups, however, decided to make exceptions in some cases, such as when activity is closely related to business secrets or when competitive bidding would lower productivity.

Those who attended the meeting with the FTC chief were Samsung Group vice chairman Kim Soon-taek, LG Hyundai Motor vice chairman Kim Yong-hwan, LG Group vice chairman Kang Yoo-shik, and SK Holdings president Kim Young-tae.

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