SPC Group cleared of antitrust penalty W64.7b

South Korean baking giant SPC Group has been fully relieved of a 64.7 billion won ($46.8 million) fine after the Supreme Court upheld a ruling in the company’s favor in a lawsuit against the country’s antitrust authority for allegedly unfairly supporting its affiliates.

The Supreme Court on Monday affirmed a lawsuit filed by five SPC Group affiliates, including SPC Samlip, against the FTC to have the fine waived.

In July 2020, the FTC found that between April 2011 and April 2019, SPC transferred a total of 41.4 billion won of profits to SPC Samlip, the group’s only publicly traded company, to support the owner’s family.

The FTC insisted that the intention was to maintain the group’s ownership succession program and secure management rights by increasing SPC Samlip’s share price.

The FTC imposed remedial orders and penalties against the affiliated companies and filed a criminal complaint against SPC Group Chairman Hur Young-in and CEO Hwang Jae-bok.

The remedial order sought to prevent SPC’s baking subsidiaries, including Paris Croissant, SPL, BR Korea and Shany, from unfairly supporting SPC Samlip by engaging it in transactions when making purchases from their manufacturing subsidiaries. It also ordered an end to the low-price transfer of shares in the Mildawon flour company, held by certain affiliates, to SPC Samlip.

However, in early January, the Seoul Supreme Court ruled that most of the FTC’s actions were unfair.

The court explained that this could not be considered an act of unfair support because it had not been proven that SPC Samlip did not play an actual role in the transactions. The FTC’s fine was also overturned at that time.

Although the fine was dismissed, the Supreme Court upheld the remedial order, finding that flour transactions between SPC affiliates and SPC Samlip were conducted on a “significant scale” and found that SPC Samlip had obtained “excessive economic benefits.”

The issues of the latest administrative proceedings largely overlap with the criminal trial of the chairman, who faced anti-employee charges. Hur was acquitted in the first trial and is currently on trial in an appeals court.