Authorities are poised to slap sanctions on Korea’s top conglomerate Samsung Group for violating investment regulations when it merged Samsung C&T with Cheil Industries in September, sources said on Friday.

The Fair Trade Commission has yet to pinpoint the violations, but industry watchers say the agency is likely to zero in on the newly created investment rotunda binding the Samsung affiliates together.

For instance, the newly merged entity holds stakes in Samsung Life, which holds stakes in Samsung Electronics, which holds stakes in Samsung Electro-Mechanics, which ultimately is a stakeholder in the merged entity.

This may be in violation of a law revision made in 2014 that bans large-scale firms such as conglomerates, from making such new circular forms of investment among their affiliates.

If the authorities confirm the violation, Samsung will be issued with immediate sanctions, or given a 6-month grace period to disassemble the offending investment structure.

By Kim Ji-hyun (jemmie@heraldcorp.com)