‘Unfair Support of Subsidiary Workforce’ Lotte Chilsung Beverage Fined 100 Million Won in First Trial

Lotte Chilsung Beverage, accused of unfairly supporting dozens of headquarters personnel to prevent the market exit of its subsidiary, was sentenced to a fine in the first trial.

Lotte Chilsung Beverage CI. [Photo by Lotte Chilsung Beverage]

On the 25th, Judge Park Byung-gon of the Criminal Division 5 at the Seoul Central District Court sentenced Lotte Chilsung Beverage Co., Ltd., which was brought to trial on charges of violating the Fair Trade Act, to a fine of 100 million won.

Judge Park stated, "It can be sufficiently recognized that Lotte Chilsung Beverage's act of providing personnel support to MJA Wine constitutes an act prohibited by the Fair Trade Act, as it unfairly provided personnel to another company or traded under significantly favorable conditions."

Lotte Chilsung Beverage was summarily indicted in December 2022 on charges of sending 26 employees on its payroll to its subsidiary MJA Wine and having them perform core tasks such as accounting processing, store management, service fee management, and sales closing on behalf of the subsidiary.

The court issued a summary order imposing a fine of 100 million won on Lotte Chilsung Beverage in March last year. However, as Lotte Chilsung Beverage appealed and requested a formal trial, the trial has been ongoing.

This case began with the Fair Trade Commission filing a complaint against the business entity (corporation), followed by prosecution indictment. In April 2021, the Fair Trade Commission imposed fines of 707 million won on Lotte Chilsung Beverage, which unfairly supported MJA Wine, which had fallen into complete capital erosion, and 478 million won on MJA Wine, which received the support, and reported Lotte Chilsung Beverage to the prosecution.

However, considering that this issue arose due to a wrongful industry practice formed in the related market to avoid restrictions under the then-enforced Liquor Tax Act, which prohibited liquor importers from retail sales, the Fair Trade Commission did not file complaints against company executives and employees but only against the corporation.