"Fair Trade Commission Sanctions Are Justified"
The Fair Trade Commission's sanction against Taekwang Group for forcing its affiliates to purchase kimchi and wine from companies owned by the controlling family has been upheld as justified in a retrial.
The Seoul High Court Administrative Division 6-2 (Presiding Judges Wi Gwang-hwa, Baek Seung-yeop, Hwang Ui-dong) ruled on the 11th that former Taekwang Group Chairman Lee Ho-jin lost the retrial lawsuit he filed against the Fair Trade Commission demanding the cancellation of corrective orders and other dispositions. This follows the Supreme Court's remand decision that it is appropriate to impose sanctions on former Chairman Lee as well.
In 2019, the Fair Trade Commission uncovered that Taekwang affiliates purchased kimchi at high prices from 'Tisis,' a company 100% owned by the controlling family, and also bought wine from 'Merbang,' another company owned by the controlling family, without reasonable standards. The Fair Trade Commission reported that the profits created for the controlling family by Taekwang's 19 affiliates through such transactions exceeded 3.3 billion KRW, and filed charges against former Chairman Lee, Group Management Planning Director Kim, and the affiliates with the prosecution. Former Chairman Lee was issued a corrective order, and the affiliates were given corrective orders along with a fine of 2.18 billion KRW.
The appellate court in the lawsuit filed by former Chairman Lee and the affiliates ruled in February 2022 that the corrective orders and fines imposed on the affiliates were justified, but the corrective order against former Chairman Lee was unlawful. The court found it difficult to conclude that former Chairman Lee was involved in the kimchi and wine transactions.
However, in March 2023, the Supreme Court stated, "Former Chairman Lee, who plays a dominant role in Taekwang's decision-making process, inevitably had a strong interest in Tisis's profit and revenue structure and could have indirectly participated in various ways by leveraging his influence," and ruled that sanctions should also be imposed on former Chairman Lee, remanding the case back to the Seoul High Court.
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