South Korea’s antitrust agency slapped 4.39 billion won ($3.56 million) in fine on Mirae Asset Financial Group for unfair in-house business deals and issued corrective orders. Its founder and top executive Park Hyeon-joo avoided criminal charge.

According to the Fair Trade Commission (FTC) on Wednesday, affiliates of Mirae Asset Financial Group awarded large-scale contracts to Mirae Asset Consulting without fair consideration or comparisons. The agency gave a correction order and fined a combined 4.39 billion won on the financial group – 2.151 billion won on Mirae Asset Consulting and 2.24 billion won on 11 affiliates including Mirae Asset Daewoo (1.04 billion won) and Mirae Asset Global Investments (604 million won).

Mirae Asset Consulting, the holding company of the financial group, is owned 48.63 percent by Chairman Park and 34.81 percent by his wife and children.

The FTC said that Mirae Asset Financial Group set up rules advising 11 affiliates including Mirae Asset Global Investments, Mirae Asset Daewoo, and Mirae Asset Life Insurance to use Blue Mountain Country Club and Four Seasons Hotel both managed by Mirae Asset Consulting.

Mirae Asset Capital – in charge of group’s business management – allegedly came up with various measures to expand profit of Mirae Asset Consulting and delivered them to each affiliate.

The FTC accused Mirae Asset affiliates to carry out corporate hospitality, events, and training at Blue Mountain Country Club and Four Seasons Hotel and also purchase holiday gifts from the two facilities.

The antitrust agency said Mirae Asset Financial Group affiliates and Mirae Asset Consulting were engaged in total 43 billion won worth of intra-affiliate trading between 2015 and 2017 – with Blue Mountain Country Club raking in 29.7 billion won in profit and Four Seasons Hotel 13.3 billion won.

The two operations were able to see rapid growth thanks to all-out support from their affiliates, the FTC said.

In 2016, Blue Mountain Country Club made profit for the first time after opening up three years ago. Losses were also reduced at Four Seasons Hotel in three years after opening in 2015.

In 2017, Mirae Asset Consulting became the top 8 hotel-related business operator by sales, with total sales jumping from 17.6 billion won in 2014 to 110 billion won in 2017.

The FTC judged Mirae Asset Financial Group violated the country’s monopoly regulation and fair trade act.

Under the law, affiliates carrying out intra trading with an affiliate with majority shares belonging to the conglomerate family – 30 percent for listed companies and 20 percent for non-listed ones – should objectively and rationally consider and compare project capability, price, and trade conditions. Mirae Asset affiliates, however, carried out large-scale contracts with Mirae Asset Consulting without such comparison.

The FTC, however, did not refer Mirae Asset Chairman Park to prosecutors, noting that the chairman did not directly make “orders” but was simply “involved” in the case.

By Lee Eun-joo

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