Prosecutors Decide Not to Indict SPC Family Head on Allegations of Unfair Support to Affiliates

Samlip Assesses Specific Roles in Distribution Process

The prosecution investigating the allegations of ‘unfair support among affiliates’ within SPC Group has decided not to indict Chairman Huh Young-in and other members of the family controlling the group.

The prosecution has requested an arrest warrant for the 5th cousin of Minister of Justice Cho Kuk, a key figure in the 'private equity fund suspicion,' and there are expectations that Professor Jung Kyung-shim, Cho's wife, will soon be summoned. The photo was taken on the 16th at the Seoul Central District Prosecutors' Office in Seocho-gu, Seoul. Photo by Kang Jin-hyung aymsdream@

According to the legal community on the 21st, the Fair Trade Investigation Division of the Seoul Central District Prosecutors’ Office (Chief Prosecutor Lee Jung-seop) last week decided not to indict Chairman Huh and other family members under suspicion of violating the Fair Trade Act, citing ‘no charges.’

SPC Group is suspected of systematically channeling profits to SPC Samlip (hereafter Samlip), whose shares are held by the second generation, in order to maintain the controlling family’s influence over affiliates and to facilitate succession of management rights by increasing the value of Samlip’s stock.

The Korea Fair Trade Commission judged that under the involvement of the controlling family, SPC unfairly supported Samlip within the group from April 2011 to April 2019, funneling a total profit of approximately 41.4 billion KRW to Samlip. Accordingly, the Fair Trade Commission imposed corrective orders and fines amounting to 64.7 billion KRW on the affiliates and reported Chairman Huh, Paris Croissant CEO Hwang Jae-bok, and others to the prosecution.

However, the prosecution summoned Chairman Huh and investigated whether he had ordered unfair support of affiliates or received reports afterward for the purpose of management succession. Afterward, it was reported that the prosecution judged that since Samlip played a certain role in the distribution process, the acts did not constitute unfair conduct.

Furthermore, in December last year, the prosecution also dismissed charges of breach of trust against Chairman Huh and others. The Fair Trade Commission viewed the 2011 transfer of the sales network from SPC affiliate Shani to Samlip at a low price and the free provision of trademark rights as problematic. However, the prosecution reportedly considered these acts as a type of market strategy with no procedural issues.