South Korea's corporate watchdog said Thursday that it fined Hyundai Motor Co., the country's No. 1 automaker, and its four affiliates more than 60 billion won (US$63.9 million) for 'unfairly' supporting other units.
The Fair Trade Commission (FTC) said it fined the automaker and four units, including Kia Motors Corp., Hyundai Steel Co. and Glovis Co., a combined 63.1 billion won for unfair business with their six sister units in breach of the country's fair competition rules.
The watchdog's year-long probe revealed that Hyundai Motor and its four affiliates had conducted unfair trading valued at approximately 3 trillion won since 2001 with the six other sister companies, including credit card company Hyundai Card Co. and steelmaker Hyundai Hysco Co.
According to the FTC, Hyundai Motor was found to have illegally funded its auto-parts unit Hyundai Mobis Co. by paying excessive amounts of money on parts supplies, as well as having subsidized Hyundai Hysco through purchasing steel plates at higher costs, the watchdog said.
The nation's top two automakers, Hyundai Steel and Hyundai Mobis were also found to have allocated most of their orders to Glovis, the Hyundai Motor's freight unit.
Hyundai Motor Chairman Chung Mong-koo and his son, Eui-sun, together own an approximate 60 percent stake in Glovis.
"(We're trying) to improve the current market environment, in which business outcomes largely depend, not on competitiveness, but on a company's affiliation," Kim Won-joon, FTC's head of competition law and policy enforcement, said.
Hyundai Motor is the world's sixth-largest automaker along with its affiliate Kia Motors, and controls more than 75 percent of the South Korean automobile market together with affiliate Kia Motors.
FTC's announcement comes a sensitive time, as a Seoul appellate court was due to give a verdict in the appeal trial of Hyundai Motor Chairman Chung Mong-koo later in the day.
In February this year, Chung was convicted and sentenced to three years in jail for embezzling more than $100 million in company funds to bribe and lobby government officials. Chung said he used part of the funds to help South Korea host an international exposition event.
Chung is now free on bail and running the automaker. Despite the conviction, Chung was appointed as an honorary chairman of a South Korean committee bidding to host an international exposition in 2012.
However, most industry observers expect Chung to receive a suspended jail term, given the judicial track record of lenient punishments for owners of family-run conglomerates called chaebol.
Shares of Hyundai Motor were trading at 71,000 won as of 2:21 p.m., down 0.56 percent.
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