SEJONG– South Korea’s antitrust regulator said Tuesday it has decided to impose fines of around 8 billion won (US$5.73 million) on Hankook Tire & Technology Co. and its tire mold manufacturing arm for an unfair trade deal.

The penalty on the country’s leading tiremaker came after the company purchased overpriced tire molds from its affiliate, Hankook Precision Works Co., eventually helping the arm solidify its presence in the market, according to the Fair Trade Commission (FTC).

The regulator said the unfair business practice lasted from 2014 to 2017.

Over the period, the operating profit-to-sales ratio of Hankook Precision Works shot up to 32.5 percent from 13.8 percent tallied for an earlier four-year period, the FTC said.

The share of Hankook Precision Works in the local tire mold market also came to 55.8 percent in 2017, significantly up from 43.1 percent tallied in 2014.

Through the gains made through the shady deal, the regulator said Hankook Precision Works was also able to pay off its debt of 34.85 billion won incurred during its acquisition by Hankook Tire in 2011.

Cho Hyun-bum, the head of Hankook Tire, and his brother Cho Hyun-sik received total dividends of 10.8 billion won between 2016 and 2017 from the tire mold maker, the FTC added.

The regulator plans to slap fines of 4.8 billion won on Hankook Tire and 3.19 billion won on Hankook Precision Works.

Hankook Tire, meanwhile, called the decision “regrettable.”

“It is regrettable that (the FTC) has ruled an incomprehensible punishment, despite our proactive efforts to provide explanations,” an official from Hankook Tire said.

“As soon as we receive the written opinion from the FTC, we plan to review its content thoroughly and seek necessary measures,” the official added.

Source: Yonhap News Agency