South Korea’s cosmetics giant Amorepacific Group has been slapped with a fine of about 100 million won ($80,000) over unfair support to its affiliate.

According to the Fair Trade Commission (FTC), the country’s top antitrust regulator, the group’s holding company provided 75 billion won worth of fixed bank deposits without a fee to Cosvision to help the affiliate receive a large low-interest loan from the Korea Development Bank (KDB) between 2016 and 2017.

The fixed deposits were used as a collateral against a loan totaling 60 billion won to Cosvision. Covision used the loan to build a new factory.

Thanks to the loan, Cosvision was able to enhance its cost competitiveness and production capacity and maintain its third-place ranking in the domestic cosmetics original equipment and manufacturing (OEM) market, the regulator said.

The FTC found this constitutes an unfair business loan procedure between a conglomerate and its affiliate, and it decided to fine the holding company and Cosvision 48 million won each.

The FTC said it will heighten surveillance on unfair support of affiliates by conglomerates and take strong action against violations.

By Moon Jae-yong and Minu Kim

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