This file photo, provided by Nongshim Co. on Jan. 3, 2022, shows its Chairman Shin Dong-won. (Yonhap)
SEOUL, Aug. 6 (Korea Bizwire) — The antitrust regulator said Wednesday it has decided to refer the chairman of leading South Korean food company Nongshim Co. to the prosecution for allegedly omitting key affiliate companies from required disclosures to avoid designation as a large business group and to benefit from incentives for small businesses.
Nongshim Chairman Shin Dong-won is accused of failing to report a total of 39 affiliated companies, including 10 owned by his relatives, in corporate materials submitted to the Fair Trade Commission (FTC) between 2021 and 2023, in violation of the fair trade act.
The foodstuff maker was supposed to be designated as a large business group in 2021, as its actual total assets exceeded the 5 trillion-won (US$3.59 billion) threshold if the omitted entities were taken into account.
As the company escaped being categorized as a large business group, however, dozens of its affiliates avoided regulations, including restrictions on unfair internal transactions by owner families and mandatory public disclosure requirements.
Some of the omitted affiliates also received tax benefits that are reserved for small and midsized enterprises.
“The act seriously undermined the purpose and foundation of policies aimed at curbing economic concentration in some large conglomerates,” the FTC said in a press release. “We will continue enhanced monitoring to ensure companies’ accurate submission of designation materials,” the FTC said.
The FTC annually compiles a list of large business groups based on their total assets, subjecting them to regulations, such as restrictions on cross-shareholding. The mandatory disclosure system is intended to promote transparency in corporate management.
(Yonhap)
