Seoul High Court cancels 234.9 billion won fine in Samsung Wellstory catering case

Yook Sung-kwon, director general of the Fair Trade Commission’s conglomerates bureau, briefs reporters at the Government Complex Sejong on April 24 about sanctions over Samsung Group’s alleged unfair support tied to in-house catering steered to Samsung Wellstory. (Yonhap) — Yook Sung-kwon, director general of the Fair Trade Commission’s conglomerates bureau, briefs reporters at the Government Complex Sejong on April 24 about sanctions over Samsung Group’s alleged unfair support tied to in-house catering steered to Samsung Wellstory. [Photo=Yonhap]

The Seoul High Court has ruled that the Fair Trade Commission must cancel fines totaling more than 200 billion won imposed on Samsung affiliates over allegations they funneled in-house catering contracts to Samsung Wellstory.

According to the legal community on April 23, the court’s Administrative Division 3, led by Presiding Judge Yoon Kang-yeol, ruled for four affiliates — Samsung Electronics, Samsung Display, Samsung Electro-Mechanics and Samsung SDI — and Samsung Wellstory in lawsuits seeking to overturn the FTC’s corrective orders and other measures.

The panel said the catering transactions, while sizable, could not be seen as providing Samsung Wellstory with excessive economic benefits. It added that the deals could not be recognized as unfair support likely to significantly undermine fair trade. The ruling lifts the burden of total fines of 234.927 billion won previously imposed by the FTC.

The FTC had argued in 2021 that Samsung affiliates, under the direction of Samsung’s Future Strategy Office, steered work to Samsung Wellstory through private contracts to shore up its profits. It imposed fines totaling about 234.9 billion won: 101.22 billion won on Samsung Electronics, 22.86 billion won on Samsung Display, 10.51 billion won on Samsung Electro-Mechanics, 4.37 billion won on Samsung SDI and 95.97 billion won on Samsung Wellstory.

The court rejected that reasoning, saying the evidence submitted was insufficient to accept the FTC’s claims about instructions from the Future Strategy Office or the alleged motive for the support.

The decision is viewed as close to a final ruling because antitrust administrative cases in South Korea follow a two-tier structure in which the Seoul High Court reviews FTC decisions before any appeal to the Supreme Court.

While the FTC may still appeal, the ruling is expected to affect a related criminal trial now underway. In 2021, the FTC also filed a complaint with prosecutors against Samsung Electronics as a corporate entity and Choi Gee-sung, a former head of the Future Strategy Office. Prosecutors indicted Choi and Samsung Electronics in 2022 on charges of violating the fair trade law, and a first trial is in progress.

* This article has been translated by AI.

KWONKYUHONG