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(LEAD) Daelim Industrial fined 400 mln won for unfair business practice

All Headlines 15:55 May 02, 2019

(ATTN: UPDATES with details, reaction of Daelim Industrial, closing share price in paras 2, 9-10)

SEJONG, May 2 (Yonhap) -- South Korea's antitrust regulator said Thursday it has fined Daelim Industrial Co. 400 million won (US$344,000) for awarding a lucrative deal to a real estate developer set up by the chairman of the major South Korean construction company.

The Fair Trade Commission also referred Daelim and company Chairman Lee Hae-wook to prosecutors.

In 2013, Daelim Industrial developed its own accommodation brand named GLAD and made the real estate developer Aplusd register it as its trademark. Daelim Industrial then turned its former building in western Seoul into a GLAD hotel a year later.

GLAD Hotels and Resorts -- a wholly owned subsidiary of Daelim Industrial and the operator of the hotel in western Seoul -- signed a deal with Aplusd in 2015 to provide regular payments for the use of the GLAD brand, according to the Fair Trade Commission (FTC).

GLAD Hotels and Resorts also signed a separate deal with Aplusd in 2016 for the use of the GLAD brand for two hotels -- one in Seoul and the other on the southern resort island of Jeju.

Aplusd received about 3.1 billion won from GLAD Hotels and Resorts from January 2016 to July 2018, part of a 10-year deal worth about 25.3 billion won.

The commission said GLAD Hotels and Resorts paid excessive fees to Aplusd, considering that Aplusd only provided GLAD Hotels and Resorts the use of the trademark and no managerial experience.

The deals have resulted in undue benefits for Lee, his son and Aplusd, which was also set up by Lee and his son in 2010, the commission said.

Daelim Industrial declined to comment.

Shares in Daelim Industrial remained unchanged at 96,800 won, underperforming the broader KOSPI's 0.42 percent gain.

(LEAD) Daelim Industrial fined 400 mln won for unfair business practice - 1

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