June 29, 2022

South Korea’s Fair Trade Commission has announced to fine 1.6 billion won ($1.3 million) to SK Inc. and SK Group Chairman Chey Tae-won over accusations that his personal purchase in LG Siltron shares in 2017 had violated the law.

According to reports, Chey had attended the Fair Trade Commission’s (FTC) full-member session in person claiming that his acquisition of shares was to defend business operation rights and not to seek personal interests.

The decision was made a week after the Chairman attendance, although his attendance was considered rare as the antitrust watchdog does not require the person involved to be present.

However, the FTC mentioned that SK shared the “unfair business opportunity” with Chey. It closed the case by imposing the above mentioned fine and did not further transfer it to the prosecution for investigation.

About the acquisition of shares –

• The conglomerate had acquired a 51 percent stake in LG’s silicon wafers manufacturing unit in January 2017, which is now named SK Siltron.
• While in the same year in April, SK had additionally bought a 19.6 percent stake, while Chey acquired another 29.4 percent stake.

The FTC mentioned that SK was capable of buying the remaining 29.4 percent stake even after acquiring 70.6 percent of Siltron shares, however instead it handed the opportunity to Chey without a reasonable reason. It also noted that the bid was negotiated behind closed doors with Woori Bank and that SK Inc. helped Chey directly and indirectly in profiting from the deal.

According to the FTC, the value of the 29.4 percent share that Chairman Chey had acquired in Siltron in 2017 has surged in 2020 by over 1,967 billion won.

According to SK Group, the FTC’s decision is difficult to comprehend as they had acquired the shares via an open auction and Chey had instead spent his own money to protect the local semiconductor market then as overseas investors had moved to buy the stake.

It further commented that the FTC latest announcement does not properly reflect the facts and legal judgments confirmed during its session’s deliberation, and almost repeats the arguments in the existing review report.

SK Group intends to take necessary measures after closely reviewing the details as soon as they receive the resolution from the FTC.