This article was displayed on the ChosunBiz RM Report site at 8:18 a.m. on May 16, 2025.
Daebang Construction has filed an administrative lawsuit against the Fair Trade Commission. This is in response to the commission's judgment that it provided improper support to the second-generation company and imposed a penalty surcharge of 20.56 billion won, while also referring the case to the prosecution.
According to legal circles and the Fair Trade Commission on the 16th, Daebang Construction recently filed a lawsuit against the commission at the Seoul High Court for the cancellation of corrective orders. The case has been assigned to the third administrative division of the Seoul High Court, and the first trial date has not yet been set.
The Fair Trade Commission raised concerns that Daebang Construction, from 2014 to 2020, secured bids for major public land across the country, including Magok in Seoul and Dongtan in Gyeonggi Province, using a 'swarm bidding' method with its affiliates, and then transferred the land to Daebang Industrial Development and five subsidiaries, of which the chairman's daughter, Gu Su-jin, is the largest shareholder.
The Fair Trade Commission noted that the six companies that received the land through resale generated a total of 1.6136 trillion won in revenue and 250.1 billion won in profit, indicating significant growth, which they referred to as 'improper support effects,' and decided to impose a penalty surcharge of 20.56 billion won and refer the corporation for prosecution.
Subsequently, the Fair Trade Investigation Division of the Seoul Central District Prosecutor's Office (Director General Kim Yong-sik) searched the offices of Daebang Construction Group's affiliates in early March and summoned Daebang Construction's CEO Gu Chan-woo for questioning on the 18th of the same month as a suspect. The prosecution then indicted Gu and Daebang Construction for violations of the Fair Trade Act without detention. In the indictment, the prosecution stated that Daebang Construction engaged in acts that could hinder fair transactions in the domestic housing development and construction market by reselling valuable public land worth about 206.9 billion won to its affiliates, providing excessive economic benefits.
The Daebang Construction case is similar in appearance to the recent Hoban Construction case, for which the Seoul High Court issued a ruling. In 2022, the Fair Trade Commission imposed a penalty surcharge of 60.8 billion won on Hoban Construction for four violations, including securing valuable public land with affiliates and transferring it to second-generation companies. However, in April, the High Court canceled about 36.5 billion won, or 60% of the penalty, stating that the commission's sanctions were unjust concerning the core and largest amount of the 'resale of public land.'
Industry insiders suggest that 'the aspect that was overturned in the Hoban Construction case was precisely the resale of public land, and the Daebang Construction case also involves a similar issue of transferring land secured through affiliate 'swarm bidding' to a second-generation company, making the Supreme Court's final ruling an important variable.'
The key dispute is whether the resale of public land secured through affiliate 'swarm bidding' constitutes a significant or considerable transaction and whether it can be seen as providing excessive economic benefits. In the Hoban Construction case, the court stated, 'The profits from public land development projects arise from subsequent sales contracts, not from the resale itself,' thus siding against the Fair Trade Commission.
Daebang Construction is expected to emphasize in the lawsuit that the Fair Trade Commission's judgment was excessive regulation and that the resale was a reasonable business decision. However, there is also a possibility that the High Court panel handling this case may make a separate judgment.
A lawyer specializing in fair trade from a large law firm said, 'When the Supreme Court reaches a final conclusion on the Hoban Construction case, it may also impact the Daebang Construction case, but if the court determines it fundamentally constitutes improper support, it could issue a ruling independently without waiting for the Supreme Court's conclusion,' adding, 'Especially, the economic evaluation of the resale of public land will be a key issue in both cases.'