South Korea: KFTC launches first ex-officio probe into chaebols

South Korea’s Fair Trade Commission (KFTC) has launched a probe into Harim Group, the country’s largest poultry processor, possible irregularities in the transfer of the company’s managerial control by chairman Kim Hong-kuk to his son, and to better understand the conglomerate’s vertical integration in the poultry industry.

The probe marks the agency’s first ex officio investigation after Kim Sang-jo, a hard-line antagonist of the family-run chaebol establishment, took charge of the KFTC in June.

Some experts have suggested that this could be a sign of impending chaebol reform which the current administration has promised.

The agency has been monitoring inter-subsidiary practices of 45 conglomerates since last March.

The Harim Group was put under the KFTC’s scrutiny in 2016 as its group-wide asset multiplied to 10.5 trillion South Korean won (US$9.33 billion) from only KR₩3.5 trillion (US$3.94 billion) in 2011 after sharp growth, mainly on property acquisition.

The regulator is looking closely into whether there were improper deals during the transfer of chairman Kim’s stake in non-listed company Orpum to his son Jun-young five years ago. Additionally, the KFTC is looking into how Harim Group’s vertical integration from poultry feed supply to processing to distribution may facilitate inter-subsidiary transactions and stifle market competition.

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