Fair Trade Commission Disclosure of the status of 76 large companies
The share of transactions in the top 10 groups is declining
The higher the total number of shares, the higher the stake
Last year, the percentage of internal transactions between affiliates of large conglomerates increased slightly compared to the previous year. Affiliates with a higher stake in the owner’s household also had a higher share of intragroup transactions, but the size has been mitigated somewhat. Logistics and information technology (IT) service franchisees tended to rely on internal transactions for about half of their sales.
On the 1st, the Fair Trade Commission disclosed the status of internal transactions of enterprise groups subject to disclosure in 2022 with these contents. In May this year, the domestic transaction amount of 76 designated conglomerates was 218 trillion won, accounting for 11.6% of sales. Compared to last year, they respectively increased by 34.5 trillion won, or 0.2 percentage points.
The share of domestic transactions of the top 10 owner groups, including Samsung, SK, Hyundai Motors, LG, Lotte, Hanwha, GS, Hyundai Heavy Industries, Shinsegae and CJ, was 12.9%, down 0. 2 percentage points over last year, a decline for the second consecutive year. However, as sales increased, the amount of domestic transactions also increased by 20.5 trillion won to 155.9 trillion won.
The trend of increasing the share of internal operations continued with the increase in the ownership share of the owner’s family or the second generation. The percentage of internal transactions in subsidiaries in which the second generation of the second generation owns less than 20% is 11.4%, while those with a share of 20% or more account for 19.3%, 30% 24.0% or greater, 50% or greater 24.3% and 100% 32.4% Increased. However, compared to last year, the overall share has decreased.
Furthermore, the incidence of internal transactions of companies subject to regulation relating to acts of undue profit to particularly related parties was equal to 9.7%, with a decrease of 2.4 percentage points compared to the previous year. However, as the number of regulated companies increased, the amount increased by 8.9 trillion won to 30.8 trillion won. The share of internal transactions of regulated companies belonging to the top 10 groups with the highest number of owners was 20.7%, down 2.6 percentage points from last year, but significantly higher than the average of 6.1% of the under 10 age group. The Fair Trade Act stipulates that a company in which the owner’s family owns more than 20% of the shares and subsidiaries in which the company owns more than 50% of the shares are subject to regulation.
Looking at the current state of logistics sales included in this year’s FTC analysis, the domestic sales of logistics affiliates belonging to 31 publicly disclosed business groups reached 12.3 trillion won, and the proportion of domestic sales reached 49.6 %. Coupang, Nonghyup and Halla accounted for 100% of domestic logistics sales. In addition, domestic sales of IT service subsidiaries belonging to 47 business groups that disclosed the status of IT service sales were 13.1 trillion won, or 68.3%. Hyundai Department Store, Nongshim, Dongwon, OK Financial Group and Coupang’s domestic IT service sales accounted for 100%.
Sejong Park Ki-seok reporter
