The Korea Herald


Samyang Foods slapped with fines for unfair funding

By Kim Yon-se

Published : Jan. 5, 2014 - 19:46

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Samyang Foods chairman Chun In-chang Samyang Foods chairman Chun In-chang
Korea’s antitrust regulator said Sunday that it would impose fines of 2.6 billion won ($2.4 million) on Samyang Foods. for its management’s alleged bid to rake in irregular gains via unfair intra-group deals.

The producer of ramen, a common Korean instant noodle, was found to have engaged in dubious funding with its affiliate between 2008 and 2013, according to the Fair Trade Commission.

FTC officials noted that Natural Samyang, a provider of seasoning for ramen additives and one of the sister companies of Samyang Foods, has enjoyed unauthorized profit as a sales network proxy between Samyang Foods and large discount chain Shinsegae E-Mart.

“While other major ramen makers carry out direct supply deals with discount chains, Samyang Foods initially paid Natural Samyang commission for ramen product sales,” said an official. “Natural Samyang later paid discount chains a certain portion of the initial payment after taking some of it.”

Samyang Foods Group chairman Chun In-chang and his wife hold a 63 percent stake in Natural Samyang. The second-largest shareholder of the seasoning maker is a company (with a 26 percent stake), funded by Chun’s son.

Further, Natural Samyang is the de facto holding firm of the group as it holds a 33 percent stake in Samyang Foods.

Market insiders alleged that Natural Samyang has taken more about 90 percent of its total sales via irregular deals with Samsung Foods over the past few years.

In 2012, the company’s sales via Samyang Foods reportedly took up 93 percent ― 48 billion won out of the total 51.3 billion won.

The two affiliates have refuted the allegation of unfair deals over the past several months, arguing that Natural Samyang has been in business contracts with Shinsegae’s food units for some 40 years.

Meanwhile, except for Shinsegae E-Mart, other discount chains such as Homeplus and Lotte Mart have made direct goods supply transactions with Samyang Foods.

By Kim Yon-se (