FTC plans to charge CJ on illegal inter-unit trading

[THE INVESOTR] The Fair Trade Commission plans to charge CJ Group for illegal inter-subsidiary transactions, industry sources said Aug. 16.

The antitrust watchdog has recently found that CJ CGV, the food and entertainment giant’s multiplex chain, has ordered from its sister ad affiliate JS Communications, owned by CJ Group Chairman Lee Jay-hyun’s younger brother Lee Jay-hwan.

Inter-unit trading is not illegal here but is subject to criminal charges when it is used to elevate sales and stock prices of a subsidiary in which the owner family holds major stake. 

JS Communications, which produces screen ads at CGV outlets, earned 56 billion won (US$51.2 million) in its inter-unit transactions with CGV during the January-September period, more than double the legal limit of 200 billion won.

A council meeting planned for next month will finalize charges against CJ, including criminal complaints, fines and punitive orders.

The FTC has probed five conglomerates -- Hyundai, Hanjin, Hite-Jinro, Hanwha and CJ -- on charges of illegal inter-subsidiary trading.

Hyundai received a fine of 1.28 billion won, while the Hanjin heirs are expected to face criminal charges. Investigations into other groups are still underway.

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