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July 16, 2024

SPC Group cleared of W64.7b antitrust fine

PUBLISHED : June 19, 2024 - 16:40

UPDATED : June 19, 2024 - 16:40

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SPC Group's signage at its headquarters in Seocho-gu, southern Seoul (Newsis)

South Korean bakery giant SPC Group has been fully absolved of a 64.7 billion won ($46.8 million) fine, as the Supreme Court upheld a ruling in the company's favor in its lawsuit against the nation's antitrust watchdog for allegedly unfairly supporting its affiliates.

The Supreme Court confirmed on Monday a lawsuit filed by five SPC Group affiliates, including SPC Samlip, against the FTC, to cancel the fine.

In July 2020, the FTC claimed that SPC funneled a total of 41.4 billion won in profits to SPC Samlip, the group's only listed company, between April 2011 and April 2019, to support the owner's family.

The FTC insisted that the intention was to maintain the group's ownership succession scheme and secure management rights by boosting the stock price of SPC Samlip.

The FTC imposed corrective orders and fines on the affiliates and filed a complaint with the prosecution against SPC Group Chairman Hur Young-in and CEO Hwang Jae-bok.

The corrective order aimed to prevent SPC's baking affiliates, including Paris Croissant, SPL, BR Korea and Shany, from unfairly supporting SPC Samlip by involving the firm in transactions when making purchases from their production affiliates. It also mandated the cessation of the transfer of flour manufacturing company Mildawon's stock shares, held by some affiliates, to SPC Samlip at a low price.

However, earlier in January, the Seoul High Court ruled that most of the FTC's actions were unjust.

The court explained that it could not be considered an act of unfair support as it had not been proven that SPC Samlip did not play an actual role in the transactions. The penalty imposed by the FTC was also annulled at the time.

Although the fine was dismissed, the Supreme Court upheld the corrective order, concluding that the flour transactions between SPC affiliates and SPC Samlip were conducted on a "sizable scale," and judged that "excessive economic benefits" were provided to SPC Samlip.

The issue in the latest administrative litigation largely overlaps with the criminal trial of the chairman, who was indicted on anti-labor allegations. Hur was acquitted in the first trial and is currently on trial at an appellate court.

By Kim Hae-yeon (hykim@heraldcorp.com)

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