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Photo courtesy of Yonhap News |
[Alpha Biz= Reporter Lee Joonhyun] South Korea’s Supreme Court has ruled that major portions of the Fair Trade Commission’s (FTC) fine against Hoban Construction were unlawful, while upholding penalties related to unfair support provided to owner-family affiliates.
On November 20, the Supreme Court’s Third Division dismissed appeals filed by both Hoban Construction and the FTC, affirming the lower court’s decision. As a result, ₩36.5 billion of the FTC’s original ₩60.8 billion fine has been canceled, leaving ₩24.3 billion payable.
Key Findings
The Court rejected the FTC’s view that Hoban engaged in unfair support through public land resale and interest-free provision of bid application fees. The ruling noted:
Public land cannot legally be sold above government-set prices under the Housing Site Development Promotion Act, meaning resale at supply price does not constitute excessive economic benefit.
The Fair Trade Act does not explicitly classify the provision of business opportunities—such as project development rights obtained through public land resale—as a form of unfair support.
Interest-free loans for bid application fees resulted in marginal benefits of only ₩8.2 million to ₩43.5 million per company, which the Court found insufficient to constitute unfair economic advantage.
Unfair Support via PF Guarantees and Project Transfers Upheld
However, the Court agreed with the FTC that Hoban’s ₩2.64 trillion in project financing (PF) loan guarantees and ₩936 billion in construction project transfers constituted illegal support for companies owned by founder Kim Sang-yeol’s sons.
The FTC previously concluded that Hoban created multiple shell affiliates between 2013 and 2015 to engage in so-called “swarm bidding” for public land, ultimately transferring 23 development projects to companies run by the chairman’s sons, which generated:
₩5.86 trillion in total sales, and
₩1.36 trillion in profits.
Court Concludes Lower Court Decision Is Sound
The Seoul High Court had earlier canceled more than half of the FTC’s fine, prompting both sides to appeal. The Supreme Court stated: “The lower court’s judgment is valid and contains no errors in legal reasoning.”
Hoban’s Response
Following the ruling, Hoban Construction said:
“We respect the Court’s decision. With the issues raised since the FTC’s 2019 investigation now resolved, we will strengthen compliance and pursue management based on fairness and principles.”
Alphabiz 이준현 기자(wtcloud83@alphabiz.co.kr)
