SEOUL, June 7 (Yonhap) -- The head of South Korea's antitrust watchdog vowed Friday to end unfair business practices by family-controlled conglomerates in the latest attempt to rein in their economic dominance and to level the playing field for smaller firms.
"I will eliminate wrong practices that threaten a fair reward system," Noh Dae-lae, the chief of the Fair Trade Commission (FTC), told European business leaders at a Seoul hotel, referring to exclusive inter-affiliate deals within conglomerates and embezzlement by owners of conglomerates.
He also said his watchdog will ban conglomerates, known as chaebol, from abusing their corporate resources for the owner's family members.
Chaebol have been credited with driving the country's economic growth in recent decades by spearheading exports. Still, they have long been criticized for awarding lucrative business deals to their affiliates, which critics claim distorted fair market competition and stripped smaller companies of business opportunities.
In April, Hyundai Motor Group vowed to cut its inter-affiliate trading, a move the world's fifth-largest carmaker said would offer new business opportunities worth 600 billion won (US$537.4 million) per year to small and medium companies.
Noh's comment comes as President Park Geun-hye has pledged to shift Asia's fourth-largest economy from one that relies heavily on the exports of large conglomerates to one in which both big and small firms coexist.
The National Assembly has passed a bill calling for stricter punishment for chaebol that abuse their power over smaller firms, such as by forcing price cuts on suppliers.
Under the bill, conglomerates will be required to pay up to three times the amount of damage they caused in compensation to their subcontractors if they engage in unfair business practices.
Such practices include stealing technologies developed by smaller firms, canceling or returning orders in unfair ways and twisting the arms of subcontractors to cut supply prices.
Noh also reiterated calls to impose a ban on new cross shareholding among chaebol affiliates to ensure that the corporate governance system would not get worse.
Circular shareholding has long been a widespread practice in South Korea, in which a handful of chaebol owner's family members control the entire business group with small stakes.
The FTC has been seeking to pass related bills to enforce the ban on additional cross-shareholding during the parliamentary session scheduled in June.
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