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Photo = Fair Trade Commission |
[Alpha Biz= Reporter Kim Sangjin] CJ Freshway, a corporate meal service company, has been fined 24.5 billion won by the Fair Trade Commission (FTC) for unfairly supporting its subsidiary, Freshwon, to dominate the regional food distribution market. This includes sending company personnel to Freshwon and covering hundreds of billions of won in labor costs.
CJ Freshway has expressed regret over the FTC's decision, stating that their initiative was intended to modernize the local food distribution market through a collaborative growth model with regional distributors. They plan to challenge the FTC's ruling through administrative litigation, claiming that their explanations were not adequately considered during the investigation.
CJ Freshway argued that Freshwon was established as a joint venture with regional distributors to advance the local food distribution market. They emphasized that the creation of Freshwon was intended to combine their strengths with those of regional players to develop a collaborative business model.
In contrast, the FTC concluded that CJ Freshway expanded its business to capture the local food distribution market, which was previously dominated by small businesses, by creating Freshwon as a nominally joint venture to enter the market. The FTC found that CJ Freshway's strategy involved buying out the shares of small businesses in Freshwon, effectively acquiring their distribution networks rather than forming a genuine joint venture.
CJ Freshway countered that the decision to purchase shares from regional distributors was made to minimize their losses and respond to requests from shareholders, with political support for a full buyout emerging in 2016. They also pointed out that the acquisition process was gradual, aimed at mitigating shareholder impact over a nine-year period.
Alphabiz Reporter Kim SangJin(letyou@alphabiz.co.kr)
