Penalty to AMOREPACIFIC, which provides deposit collateral to affiliates free of charge

[Infostock Daily= reporter Song Jeong-hoon] AMOREPACIFIC Group, which provided deposit collateral to its subsidiaries free of charge and helped borrow funds at low interest rates, will be subject to penalties from the Fair Trade Commission.

The Fair Trade Commission said on June 6 that AMOREPACIFIC imposed a fine of 96 million won on the act of supporting low-interest facility borrowing to its affiliate Cosvision.

AMOREPACIFIC has revealed that its subsidiary Cos Vision has provided 75 billion won in fixed deposits free of charge as collateral to borrow facility funds from the Korea Development Bank.

As a result, Cos Vision was able to borrow 60 billion won from the Korea Development Bank five times from August 2016 to August 2017 with an annual interest rate of 1.72% to 2.01%.

Cosvision has benefited from 139 million won thanks to a significantly lower interest rate than the normal interest rate, the Fair Trade Commission said.

The Fair Trade Commission ruled that Cos Vision's unfair support by its parent company increased its production capacity by up to 50% and that the act of profit at low interest rates amounted to "unfair support" prohibited by the Fair Trade Act.

Reporter Song Jeong-hoon boxr@infostock.co.kr