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December 12, 2018

Trademark fees received by chaebols exceed W1tr in 2017

PUBLISHED : October 07, 2018 - 16:54

UPDATED : October 07, 2018 - 16:54

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[THE INVESTOR] Trademark usage fees received by holding companies of Korea’s largest conglomerates exceeded 1 trillion won (US$884.5 million) for the first time ever in 2017, a report submitted to parliament by the country’s anti-trust watchdog showed on October 7.

The findings submitted to Rep. Lee Tae-kyu’s office by the Fair Trade Commission showed that, of the 60 largest conglomerates with assets in excess of 5 trillion won that have to disclose such data, 37 business groups received money for allowing companies to use their corporate logos.

A total of 425 affiliates paid the group 1.13 trillion won during the one-year period.

Of the conglomerates, LG received the most at 274.3 billion won, up 28.5 billion won from a year earlier. This was followed by 184.5 billion won provided to SK Holdings Co. and 137.5 billion won for Hanwha, although the total paid to SK was down from the previous year.

In addition, CJ, GS, Hankook Tire and Hyundai Motor all received significant sums from affiliates.

Some trademark fees were calculated by taking into account sales and advertisement-related outlays, as in the case of LG and SK, or by directly taking a percentage of sales or operating profit, which was the method employed by Samsung and Shinsegae groups, the FTC said.

It said that telecom giant KT opted for an even more complicated system of calculating sales and earnings before interest, taxes, depreciation and amortization.

Companies have said in the past that the different trademark cost calculations reflect particular markets and unique corporate structures.

On the other hand, such deals have been seen as arbitrary by some and as a means by which affiliates can send large amounts of money to the owners of the chaebol conglomerates.

“There has been a steady uptick in money going to the holding companies of chaebol groups with no clear guidelines,” Rep. Lee of the minor opposition Bareunmirae Party said.

He stressed the FTC needs to get a better grasp of the movement of such funds and make certain there are no unfair benefits going to chaebol owners.

By Ahn Sung-mi and news wires (sahn@heraldcorp.com)

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