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September 20, 2005 1:06 pm

Watchdog fines Samsung for hindering probe

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South Korea’s antitrust watchdog on Tuesday fined Samsung Electronics, Asia’s most valuable technology company, for “systematically hindering” its investigation into unfair contracting practices.

The Won60m will hardly make a dent in Samsung’s coffers, but it will come as something of an embarrassment for the company, which prides itself on its international stature and recent advances in corporate governance practices.

The Fair Trade Commission started investigating allegations of unfair subcontracting practices between Samsung and Semes, its semiconductor-making subsidiary.

However, in November last year, Samsung Electronics obstructed the inquiry by ordering Semes to destroy or fabricate some key documents, the FTC said in a statement. It also accused Samsung of “training” Semes employees to respond to the commission's questions.

It levied a Won20m fine against the company itself and the same amount against two directors.

Samsung declined to comment.

Earlier this month, Samsung Electronics, which is the world’s second-largest maker of liquid crystal displays, said it would consider significantly scaling back its multibillion-dollar investment in flat screens if profitability continued to slide while competition intensified.

Tough trading conditions across all divisions – including handsets and semiconductors as well as LCDs – could cut the company’s total profits by as much as a fifth this year, Yun Jong-yong, its chief executive, told the FT.

The LCD sector has been plagued by over-supply and a lack of demand, but Samsung was considered to be holding up well, so doubts about its future in the industry are likely to have rattled competitors and investors alike.

However, Samsung Electronics was reported as saying that it had raised its projections for global LCD shipments, citing higher-than-expected demand for panels used in televisions and computers.

 

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