Imposition of Administrative Order and Fine of 510 Million Won
HNC, an affiliate of Korea Kolmar, has been sanctioned by the Fair Trade Commission for unfair support activities toward a second-generation family company.
On the 10th, the Fair Trade Commission announced that it would impose corrective orders and a fine of 510 million won on HNC and the former KBLab for violating the Fair Trade Act.
HNC, an affiliate of the corporate group Korea Kolmar, is a company specializing in cosmetics OEM (Original Equipment Manufacturing) and ODM (Original Design Manufacturing). To sell its self-developed cosmetics brand 'Labno,' HNC established KBLab as a wholly owned subsidiary in August 2016.
Yoon Yeowon, CEO of Kolmar BNH and daughter of Korea Kolmar founder Yoon Donghan, purchased all shares of KBLab, which was in a state of capital erosion at the time, for 100,000 won in September 2018.
According to the Fair Trade Commission, from around August 2016 to May 2020, when CEO Yoon acquired KBLab, HNC dispatched 4 to 15 employees annually to KBLab and paid approximately 904 million won in labor costs on their behalf.
As a result, KBLab was able to secure HNC’s professional personnel with expertise in sales and marketing know-how and human networks without any effort, gaining favorable competitive conditions compared to rival businesses. The Fair Trade Commission judged this as unfair support and decided to impose sanctions.
Despite HNC’s support, when KBLab’s business viability did not improve, CEO Yoon sold all shares to a third party in December 2020, when the COVID-19 pandemic was in full swing. Currently, KBLab’s corporate name has been changed to Wirye.
The Fair Trade Commission stated, "We will continue to monitor unfair support activities in mid-sized corporate groups that are blind spots in market surveillance and will strictly sanction any violations of the law when confirmed."
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