Myungnyun-dang reportedly secured policy funds from the Korea Development Bank and lent up to 10 billion won to each of these newly formed loan companies. The loan companies then used these funds to lend to franchise owners.
The Fair Trade Commission (FTC) announced on July 6 that it has sent an investigation report regarding Myungnyun-dang and the 14 affiliated loan companies to the parties involved and submitted it to the commission for review.
The investigation report includes findings of illegal activities and recommendations for sanctions based on the FTC's inquiry. The sending of the report marks the beginning of the FTC's formal sanction review process.
According to FTC investigators, Myungnyun-dang established the 14 loan companies sequentially from 2021 to 2024.
From December 2021 to April 2024, the companies are accused of lending money at significantly lower rates than the market average.
At that time, the loan companies were in their early stages and faced difficulties in securing independent funding. Myungnyun-dang provided them with loans at an annual interest rate of 4.6%.
FTC investigators believe that the loan companies gained approximately 21.7 billion won in economic benefits by paying less interest than they would have under normal circumstances. This allowed the newly established affiliates, which struggled to secure funding independently, to significantly reduce their financial costs by borrowing from the parent company at low rates.
The Fair Trade Act defines the act of providing funds or other benefits to related parties or other companies under significantly favorable conditions as an act of unfair support.
Investigators view Myungnyun-dang's funding activities as a 'serious violation' of the prohibition against unfair support under the Fair Trade Act. They have recommended corrective measures, the imposition of fines, and the prosecution of Myungnyun-dang and related individuals.
However, the contents of the investigation report reflect the investigators' judgment and do not represent the FTC's final conclusion. The final determination of legal violations and the level of sanctions will be made after a review by the full committee.
Myungnyun-dang can submit written opinions and request access to evidence after receiving the investigation report. They will also have the opportunity to present their views during the FTC's review process.
An FTC official stated, "We ensure that the rights of the accused are fully protected through procedures such as the submission of written opinions, requests for evidence access, and opportunities for presenting opinions during the review. We plan to make a final judgment through the full committee's review and will continue to monitor any unfair low-interest funding to affiliated companies."
* This article has been translated by AI.
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