Supreme Court Finalizes Cancellation of FTC Sanctions
on SK Over "SK Siltron Share Acquisition as Misappropriation of Business Opportunity"
The Supreme Court has finalized a ruling ordering the cancellation of fines imposed by the Fair Trade Commission (FTC) on SK Group Chairman Chey Tae-won and SK Inc. regarding allegations of private interest transactions involving SK Siltron.
On June 26, the Supreme Court’s Second Division (Presiding Justice Eom Sang-pil) upheld the lower court’s ruling in favor of Chey and SK in their appeal against the FTC’s corrective order and fine. The Supreme Court found that the lower court’s decision?that SK’s decision not to participate in the bidding and allowing Chairman Chey to acquire SK Siltron shares did not constitute the provision of a business opportunity?was valid.
In January 2017, SK acquired a 51% stake in LG Siltron (now SK Siltron), a semiconductor wafer manufacturer. In April of the same year, SK purchased an additional 19.6% of the remaining 49% stake, while Chairman Chey later acquired the remaining 29.4%. The FTC determined that Chairman Chey’s acquisition of these shares deprived SK, the holding company, of a business opportunity, and in December 2021 imposed a corrective order and fines of 800 million won each on both Chey and SK.
The FTC concluded that SK conceded the remaining shares to Chairman Chey without reasonable review after he expressed interest in acquiring them, resulting in Chey obtaining unjust gains. This case drew attention as it was the first instance in which the FTC imposed sanctions for a controlling shareholder’s use of a business opportunity.
Chey and SK filed a lawsuit challenging the FTC’s decision. Appeals against FTC rulings are handled in a two-tier system (Seoul High Court and Supreme Court). Chey and SK argued that SK’s decision not to acquire the remaining shares could not be simply defined as the provision of a business opportunity.
At the time, SK claimed that acquiring only the 19.6% stake in LG Siltron held by KTB PE was sufficient to secure stable management control, and thus there was no reason to take on additional risk by acquiring a 100% stake.
Chey and SK asserted that Chairman Chey acquired the 29.4% stake held by the creditor group, including Woori Bank and others, through fair and competitive bidding based on strategic judgment, and that there was no collusion with the creditor group or receipt of any undue benefits. The Seoul High Court ruled in favor of Chey and SK in January last year. The Supreme Court, after reviewing the case again due to the FTC’s appeal, upheld the Seoul High Court’s decision.
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