Half of Revenue from Licenses... FTC Launches On-Site Investigation into CJ Group's Brand Royalties

Investigators Dispatched to Major Affiliates
FTC Likely to Assess Legitimacy of License Agreements

The Fair Trade Commission (FTC) has launched an on-site investigation into CJ Group’s trademark (brand) royalty transactions, following a similar probe into Hanwha Group. The investigation aims to determine whether profits generated by intangible brand assets have been illicitly transferred from affiliates to the holding company, where ownership stakes held by the owner family are high.

According to authorities and industry sources on July 7, the FTC dispatched investigators to major CJ Group affiliates in Jung-gu, Seoul, to secure documents on brand license agreements and royalty calculation standards.

The FTC suspects that CJ Group has been charging excessively high trademark royalties compared to other large business groups. While the royalty rate, typically calculated by deducting advertising and promotional expenses from sales, is less than 0.2% at SK, LG, GS, and Lotte, CJ’s rate stands at 0.4%—more than double that of its peers.

In fact, CJ, the holding company, collected 134.7 billion won annually in trademark royalties, with the amount accounting for nearly half of the holding company’s revenue. Chairman Lee Jay-hyun and other members of the owner family hold a combined 44.9% stake in CJ.

Previously, the FTC conducted a similar on-site investigation last month into affiliates of Hanwha Group on the same charges. An FTC official stated, "We cannot confirm details regarding individual cases."

This content was produced with the assistance of AI translation services.