The KNHC’s discrimination in favor of affiliated companies is one of the leading cases in
which the Supreme Court ruled the KNHC’s conduct was not an act of discrimination with no
justifiable reason.
According to the Court’s ruling, it is reasonable to view that the advance payments made by
the KNHC to its newly acquired affiliates was a conduct performed within the scope of its
authority to approve free contracts and provide financing support, which was granted by the
government in order to facilitate the normalization of business of these ailing affiliated
companies. In addition, the KNHC’s conduct could be seen as an act for the public good
since its purpose was to promote social and economic stability by preventing social problems
such as collective complaints, mass layoffs, and a chain reaction of bankruptcies of
construction material suppliers and subcontractors, which were the results of suspension of
apartment construction that would be caused if these companies went bankrupt again, and as
an act inevitably carried out to prevent the bankruptcy of the KNHC that provided loans and
payment guarantees amounting to over KRW 1 trillion. On these grounds, the Court ruled
that the KNHC’s conduct did not constitute an act of discrimination in favor of affiliated
companies without justifiable reasons