Gov't regulations on intra-group deals to affect three units per conglomerate

SEJONG, Oct. 1 (Yonhap) -- South Korea's conglomerates will have an average of three affiliates affected by the government's restrictions on their so-called intra-group transactions, the corporate watchdog said Tuesday.

Intra-group business deals refer to transactions taking place among affiliates of the same business group.

They have been blamed for sidelining many small- and medium-sized companies in the bidding process, while some raise suspicions that such deals are designed to transfer wealth among group owners without paying due taxes by awarding contracts with favorable terms to companies held by their family members.

The government has been stepping up its crackdown on intra-group deals as part of efforts to enforce fair market principles.

The Fair Trade Commission (FTC) said Tuesday that it will seek a law revision that would toughen regulations on intra-group deals involving listed affiliates where group owners and their families hold more than 30 percent of the shares. For unlisted companies, the figure would be 20 percent.

Based on the rules and industry data, a total of 122 affiliates of 43 major business groups, including Samsung and Hyundai groups, will be affected by the law. This means that a conglomerate will have an average 2.8 companies that will be subject to toughened regulations on intra-group deals.

Samsung Group, Hyundai Motor Group and SK Group will hold 2, 10 and 4 affiliates to be affected by the law, respectively. Samsung Petrochemical, Samsung Everland, Hyundai Innocean, Hyundai Glovis, Hyundai Emco and SK C