Agency 'Bundling Sales' Monitoring Regulations Strengthened... Administrative Notice of Unfair Trade Review Guidelines

If the product requested by headquarters does not reduce market competition restrictions, it will be allowed.
In the future, regardless of product distinction,
if purchase is coerced against the dealer's will, it will be judged as 'purchase coercion'.

Chairman Jo Sung-wook of the Fair Trade Commission (right) and Kim Tae-nyeon, floor leader of the Democratic Party of Korea (left), are seen talking at the 'Party-Government-Blue House Euljiro Livelihood Issues Meeting' held at the National Assembly on the 15th. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Moon Chaeseok] The government announced that it will refine the guidelines for reviewing unfair trade practices in the dealership sector and regulate 'gapjil' such as forced sales. Previously, 'tying sales' between headquarters and dealerships were permitted as long as there was no market competition restriction, but going forward, the focus will be on whether dealerships were forced to purchase products against their will regardless of product distinction.

The Fair Trade Commission (FTC) announced on the 19th that it will publicly notify the draft "Guidelines for Reviewing Unfair Trade Practices in the Dealership Sector" from today until July 9.

The FTC explained that until now, there were no specific criteria to determine violations of the law by type of prohibited acts stipulated in the Dealership Act, so it prepared the review guidelines draft.

The draft guidelines are one of the 28 detailed tasks announced on the 15th through the Euljiro Livelihood Issues Meeting of the ruling party, government, and Blue House as part of the "Fair Economy System Improvement Plan to Overcome COVID-19."

There was a gap between the "Guidelines for Reviewing Unfair Trade Practices" under the Fair Trade Act and the Dealership Act. For example, the "Prohibition of Refusal or Evasion of Order Content Confirmation" under Article 11 of the Dealership Act was not stipulated in the Fair Trade Act.

The draft guidelines consist of the purpose, scope of application, general principles for reviewing illegality, and criteria for reviewing illegality by individual act types.

First, regarding the scope of application, it specifically defines the meanings of resale, consignment sales, contracts lasting for a certain period, and repeatedly conducted transactions, which are the requirements for dealership transactions under Article 2, Paragraph 1 of the Dealership Act.

In the general principles, it establishes criteria for judging the supplier's transaction status and the unfairness of dealership transactions. Among these, the unfairness of dealership transactions is judged through ▲fairness of transaction content ▲rational reasons ▲unfairness judgment.

Notably, it specifically defines seven "criteria for reviewing illegality by individual act types."

First, it concretely sets the criteria for forced purchase acts. This includes acts that force the purchase of products that the dealership has no intention to buy, as well as order coercion, creating situations where orders are unavoidable, and unilaterally modifying order contents.

Above all, dealership "tying sales" will be judged not based on competition restriction but on whether the dealership was forced to purchase regardless of the distinction between the main product and the tied product.

For example, ▲continuously urging to buy products and creating situations where dealerships have no choice but to order by penalizing those who do not purchase, thereby forcing purchases ▲unilaterally changing the dealership's order details to supply the shortfall when the dealership's order volume falls short of the supplier's set quota are considered forced purchase acts.

Acts forcing the provision of economic benefits are defined as ▲forcing the provision of economic benefits such as money, goods, or services ▲passing on promotional costs or forcing the burden of employee wages, donations, or sponsorship fees.

Additionally, criteria were prepared for ▲forced sales target acts ▲acts of providing disadvantages ▲interference in management activities ▲refusal or evasion of order content confirmation requests ▲retaliatory acts.

Seok Dongsu, head of the Dealership Transaction Division at the FTC, said, "With the establishment of these review guidelines, specific criteria for judging unfair trade practices in the dealership sector will be prepared, ensuring consistency in law enforcement," and added, "It will increase predictability for suppliers (headquarters) and contribute to preventing legal violations."

Seok also said, "In particular, suppliers can now prevent and block various unfair trade practices against dealership owners due to profit declines caused by the economic downturn from COVID-19," and predicted, "It is expected to contribute to protecting dealership owners who are in a weaker transaction position during economic crises."

The FTC plans to finalize and implement the draft after fully hearing opinions from stakeholders through this public notice and going through committee resolutions.

This content was produced with the assistance of AI translation services.