The antitrust regulator is considering cracking down on irregular deals between conglomerates and their overseas subsidiaries, whereas only domestic units have been subject to probes for intra-group trading.

The new potential policy of the Fair Trade Commission was proposed after some lawmakers argued that “big firms’ overseas units have been a regulatory loophole as the authorities focus on the illegal cross-affiliate trading in the domestic market.”

During a parliamentary hearing on the FTC, Rep. Park Min-shik of the ruling Saenuri Party alleged that that some conglomerates are raking in illicit gains through monopolistic deals with their units operating in foreign markets.

Market insiders cite Hyundai Glovis as a representative firm that frequently carries out trading with its overseas subsidiaries.

While the deals between Hyundai Glovis, a logistics unit of Hyundai Motor Group, and its domestic affiliates or subsidiaries account for 35 percent of the firm’s total sales, the ratio reaches 81.9 percent when its deals with overseas affiliates are included.

As of the end of 2012, its overseas intra-group trading came to 4.3 trillion won ($3.9 billion), surpassing such local deals totaling 3.2 trillion won.

The nation’s five major business groups ― Samsung, Hyundai Motor, SK, LG, GS and Hyundai Heavy Industries ― share similar overseas-trading practices.

The five conglomerates’ domestic intra-group trading as a portion of their collective sales fell 1.9 percentage points in 2012 from the previous year. Meanwhile, the proportion of overseas deals increased by 2.6 percentage points in the same period.

Last July, the National Tax Service implemented taxation on cross-affiliate deals in the business sector.

The tax agency has unveiled a policy to impose gift taxes on some 10,000 individuals including owners of businesses ― which offered exclusive benefits to affiliates or subsidiaries ― and the owners’ powerful connections.

While the authorities’ nominal targets include chaebol bosses such as Samsung Electronics chairman Lee Kun-hee and Hyundai Motor chairman Chung Mong-koo, research analysts allege the major conglomerates have already sought out legal loopholes.

“Only small and medium enterprises, due to their relative lack of familiarity with the tax requisitions, will be the main victim over the next few years,” said analyst.

By Kim Yon-se (kys@heraldcorp.com)