Minor shareholders of Taeyang, the manufacturer of the butane gas 'Sun Fuel', have won a partial ruling in a shareholders' representative lawsuit against CEO A for damages after he was penalized by the Fair Trade Commission for 'price collusion'. The Supreme Court ordered CEO A to compensate the minor shareholders 9.666 billion won.
The Supreme Court's Third Division (Chief Justice Lee Heung-gu) on June 12 confirmed the second trial ruling, stating, 'Both the plaintiff's and the defendant's appeals are dismissed,' upholding the second trial's decision. Previously, the second trial had ordered CEO A to compensate 9.666 billion won to the shareholders.
Previously, CEO A concurrently served as the CEO of his affiliate, Seaan. Taeyang received a penalty surcharge of 15.96 billion won from the Fair Trade Commission in June 2015 for colluding with the 2nd to 4th ranked companies in portable butane gas, including Seaan, on product shipping prices nine times from September 2007 to February 2011. In addition, CEO A was prosecuted for violating the Monopoly Regulation and Fair Trade Act in connection with the price collusion incident and received a confirmed fine of 1.5 billion won.
In response, Taeyang's minor shareholders filed a representative lawsuit in May 2018 demanding about 42.3 billion won in damages (comprising the penalty surcharge of 15.96 billion won and 26.3 billion won for abuse of business opportunities, etc.). The minor shareholders claimed that CEO A caused damage to the company through price collusion and took personal benefits by exploiting his dominance in the domestic and international butane gas markets.
The shareholders also stated that CEO A caused damage to the company by violating obligations related to non-competition, prohibiting the abuse of business opportunities, and fiduciary duties while managing the affiliate Seaan simultaneously.
The first trial ruled in January 2020 that CEO A should compensate the shareholders 9.576 billion won, which corresponds to 60% of the Fair Trade Commission's penalty surcharge of 1.59 billion won. The first trial court noted, 'The violation of law by CEO A is very serious, and the penalty surcharge is also substantial enough to amount to the company's annual operating profit, causing indirect economic harm not only to the company but also to the shareholders.' However, the first trial court did not accept the minor shareholders' claims regarding the violations of non-competition obligations, prohibiting the abuse of business opportunities, and fiduciary duties. CEO A appealed the first trial ruling.
The second trial ordered CEO A to compensate 9.666 billion won, an increase from the first trial. The shareholders claimed approximately 16.1 billion won by adding the confirmed fine against CEO A to the penalty surcharge compensation claim, which the court accepted. However, the compensation ratio (60%) remained unchanged.
CEO A also appealed the second trial ruling. However, the Supreme Court found no issues with the second trial's ruling and confirmed the compensation amount.