Korea's FTC fined Kumho Asiana 32 billion won for funnelling support to Bus Lines

In August 2020, Korea's Fair Trade Commission imposed a combined 32 billion won in fines on Kumho Asiana Group companies for unfairly supporting Kumho Bus Lines, the affiliate in which the owner Park family raised its combined stake from 41.1 percent in 2016 to 50.9 percent. The antitrust agency also filed complaints with prosecutors against former chairman Park Sam-koo and two executives for abetting the scheme.

The centrepiece was Asiana Airlines' in-flight meal contract: the group designed a package in which the winning caterer had to invest in Kumho Bus Lines by buying bonds with warrants. Switzerland's Gategroup accepted, won a 30-year meal-service right from Asiana in December 2016, and bought 160 billion won of the BWs in 2017 at zero percent interest when the normal rate exceeded 3.7 percent — worth 16.2 billion won in unfair profit to Bus Lines, whose shares traded below the 150,000-won exercise price, making the warrants worthless as investments.

On top of that, nine group companies including Kumho Engineering & Construction, Asiana Airlines, Air Busan and Air Seoul lent Kumho Bus Lines a total of 130.6 billion won between August 2016 and April 2017 at 1.5 to 4.5 percent, far below the prevailing 3.49 to 5.75 percent. Kumho E&C, the group's main unit, drew the largest single fine at 14.89 billion won. 'If a business group unconditionally supports a unit just because the owner family has a majority stake in it, this can cause a group-wide collapse,' the FTC said.

Combined 32 billion won (US$26.98 million) in fines across group companies, and criminal complaints filed against former chairman Park Sam-koo and two executives.

The owner family needed a control vehicle, and Kumho Bus Lines was it — so the group's assets were bent toward financing it.

The catering contract and the BW purchase were bundled, making a major operational award contingent on financing the family's stake.

Below-market loans from nine affiliates moved 130.6 billion won toward the family-controlled company on favourable terms.

Kumho Bus Lines used the financing to acquire Kumho E&C and other affiliates, entrenching the structure the FTC found abusive.

A group that channels support to whichever unit holds the family stake converts ordinary business deals into antitrust evidence — and hands regulators a control-abuse map.

The fines stood at 32 billion won combined, with Kumho E&C paying 14.89 billion won, and the complaints against Park Sam-koo and the two executives went to prosecutors; the FTC publicly framed the case as a warning that owner-family control structures built on affiliate support invite group-wide collapse.