The Fair Trade Commission said Friday that the government is currently investigating the legal standings of Harim Group CEO Kim Hong-kuk handing off 100 percent of stakes in Orpum, an unlisted chicken subsidiary, to his 25-year-old son Kim Jun-young in 2012.
As part of the government’s latest pledge to crack down on illegal and unfair business practices, the FTC has selected local poultry giant Harim Group, Korea’s leading livestock and animal feed group, as the first conglomerate to probe in its ongoing investigations into large Korean corporations.
Harim Group logo (Harim Group)
The FTC reportedly sent a team of 50 investigators to Harim’s headquarters earlier this week to retrieve business documents related to transactions data and sales figures between affiliates companies.
The commission is expected to look into Harim’s cross-shareholding transactions. The company’s total assets reached 10.5 trillion won ($9.3 billion) in May of this year and it was designated as a cross-shareholding enterprise group for the first time. However, should an affiliate with more than 30 percent stake in a large corporation accumulate more than 20 billion won in internal transactions with another group affiliate, fines will be levied.
The FTC announced earlier this week that it would be establishing new measures to eradicate unfair practices in the franchise restaurant sector. The head of Korea’s antitrust watchdog Kim Sang-jo said the commission will create a healthy franchise market by enforcing fair affiliate transactions.
The announcement came amid turbulent times for franchise businesses, which have been under heavy government scrutiny for alleged unfair business practices. The founder and chairman of Mr. Pizza was recently arrested under accusations he ripped off food suppliers and opened shops next to franchisee-owned outlets as a retaliation tactic.
By Julie Jackson (email@example.com