The Korea Herald


42 conglomerates earned W1.42tr in brand license fees from affiliates last year

By Yonhap

Published : Dec. 27, 2020 - 13:06

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South Korea's 42 conglomerates (Yonhap) South Korea's 42 conglomerates (Yonhap)
South Korea's antitrust watchdog said Sunday 42 large business groups earned a combined 1.42 trillion won ($1.29 billion) by selling brand licenses to their affiliates last year amid concerns conglomerate owners could glean profits from such transactions.

The 2019 tally marked a 7.6 percent rise from the previous year's 1.32 trillion won, according to the Korea Fair Trade Commission (KFTC).

Of 64 business groups that are required to disclose such data, 42 conglomerates, or 65.6 percent, raised brand commission fees from their affiliates last year, the watchdog said.

SK and LG topped the list by charging their affiliates 270.5 billion won and 267.3 billion won, respectively.

Next were Hanwha with 147.5 billion won and Lotte with 102.4 billion won.

Conglomerates with assets of over 5 trillion won are required to publicly disclose the details of brand license contracts with affiliates every year.

South Korea's family-run conglomerates, called chaebol, have been under fire for cross-shareholding arrangements among affiliated companies, often meant to strengthen owner families' control of the entire group.

The government has encouraged conglomerates to adopt holding company systems to resolve cobweb-like ownership structures.

But some big-name business groups have used the scheme as a tool to strengthen the grip of founding families over affiliated firms, rather than to improve the transparency of management. (Yonhap)