The Fair Trade Commission (FTC) Wednesday launched a probe into 57 nonprofit organizations of conglomerates, including Celltrion, SK Group, LG Group, and CJ Group, to determine whether the nonprofits are part of a management ploy.
Korean conglomerates are well-known to be run by families that employ complex, intertwined cross-shareholding as a means of expanding management control. Their nonprofit units have also been criticized as an organization made to evade taxes, the regulator said.
The probe comes amidst rising criticism against the family-run chaebols for setting up nonprofits to avoid paying taxes while maintaining a monopolistic control over the conglomerates.
The antitrust regulator will investigate nonprofits created by conglomerates, including those of conglomerates in healthcare or with healthcare divisions, such as Celltrion, SK Group, LG Group and CJ Group, it said.
“Criticism of conglomerates using nonprofits as a tool to illicitly expand dominance without paying taxes has been made continually,” the FTC said. “We will look into the current status of operations and related parties before forming and executing a policy that restricts conglomerates from exercising monopolistic control over subsidiary nonprofits.”
The National Assembly has also motioned a revised fair trade bill that restricts public corporations from holding decision-making power of subsidiary stocks, the FTC added.
<© Korea Biomedical Review, All rights reserved.>