Hoban Construction Has 365 Billion Won of 60.8 Billion Won FTC Fine Overturned—Supreme Court Ruling Finalized

(Seoul=Yonhap Infomax) Myung Sub Byun = South Korea's Supreme Court has finalized a ruling that cancels 36.5 billion won ($27.7 million) out of the 60.8 billion won ($46.2 million) fine imposed on Hoban Construction Co. by the Fair Trade Commission (FTC).

The Supreme Court's third division, presided over by Justice Lee Heung-gu, on the 20th upheld a lower court decision partially in favor of Hoban Construction and eight affiliated companies in their lawsuit seeking to overturn the FTC's corrective order and fine.

In June 2023, the FTC imposed a corrective order and a fine of 60.8 billion won ($46.2 million) on Hoban Construction, alleging that the company had unfairly supported affiliates owned by the second generation of the controlling family—such as Hoban Construction Housing and Hoban Industry—through improper internal transactions and provision of business opportunities.

According to the FTC, between 2013 and 2015, Hoban Construction created multiple affiliates that were essentially shell companies to increase the probability of winning public land bids, a practice known locally as "swarm bidding." The company then transferred 23 parcels of public land it had won to Hoban Construction Housing and Hoban Industry, both controlled by the chairman's sons.

The court ruled that transferring the public land at the original supply price did not constitute the provision of excessive economic benefit.

The court further explained, "The Fair Trade Act (South Korea's antitrust law) does not define the provision of business opportunities as a type of unfair support. Therefore, providing project opportunities through the resale of public land cannot be sanctioned as an unfair support act."

Additionally, the court found that the interest-free loans provided for bid deposits were minor in amount for each company and did not amount to "excessive economic benefit."

Hoban Construction stated, "The Supreme Court's final ruling to cancel the FTC fine resolves the core issue of alleged succession support for the second generation through the transfer of public land ownership."

The company added, "Regarding multiple bidding (swarm bidding), the prosecution closed its investigation with a non-indictment decision in May, fully clearing suspicions of unfair business allocation among affiliates."

Hoban Construction concluded, "All allegations raised since the FTC's 2019 investigation have now been resolved. We will continue to pursue management based on fairness and principles, aiming to grow alongside society."

msbyun@yna.co.kr

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