Fair Trade Commission: "Unfair Practices Persist in Dealership Sector, Including Sales Targets and Forced Purchases"

Survey Results on Dealership Transactions in the 'Machinery, Feed, Household Goods, Liquor, Paint, Cosmetics' Industries

[Sejong=Asia Economy Reporter Joo Sang-don] It has been revealed that unfair practices in the dealership sector, such as being forced to meet sales targets or purchase quotas by the head office, still persist.

On the 9th, the Fair Trade Commission announced the results of an investigation and analysis of dealership transactions conducted across six industries: machinery, feed, daily necessities, alcoholic beverages, paint, and cosmetics.

The results showed that in many cases, dealership sales accounted for more than 40% of total sales in these six industries, indicating a significant proportion of dealership transactions among all distribution methods. In the paint and daily necessities sectors, the resale ratio exceeded 90%, and in all six industries, the resale ratio was higher than the consignment sales ratio. Cosmetics (88.3%) had a high proportion of exclusive transactions, whereas the other five industries had a higher proportion of non-exclusive transactions.

Regarding dealership sales prices, many dealerships decided prices autonomously, but a considerable number responded that suppliers set the prices. This proportion reached 40.1% in cosmetics. Except for alcoholic beverages, five industries including daily necessities and cosmetics reported conducting online sales alongside dealership sales, with a notably high response that online sales prices were lower than dealership sales prices. Specifically, the rates were 66.3% for machinery, 88.0% for feed, 79.7% for daily necessities, 82.9% for paint, and 89.6% for cosmetics.

All six industries experienced unfair practices such as forced sales targets. The percentages of those who experienced forced sales targets were 23.4% in cosmetics, 22.3% in machinery, 14.3% in feed, 14.8% in daily necessities, 7.1% in alcoholic beverages, and 8.4% in paint. In paint, the highest proportion of unfair practices was forced purchases at 9.1%.

Among these six dealership sectors, 35.7% responded that institutional improvements are needed to prepare remedies for damages when multiple or similar damages occur. This was followed by high demand for establishing grounds for model transaction standards (34.1%) and for requesting the establishment or revision of standard contracts by business associations (30.6%). Regarding standard contracts, 72% to 83.7% of respondents across all six industries expressed the need for them.

Based on the results of this investigation, the Fair Trade Commission plans to gather opinions from suppliers and dealership organizations and establish and disclose a standard dealership contract by December this year. A Fair Trade Commission official stated, "We will conduct ex officio investigations into suspected legal violations found in the investigation results to correct unfair trade practices. We will also strive to institutionalize the industry's demands identified in the investigation results as soon as possible, including establishing effective remedies for dealership damages, setting model transaction standards, and providing legal and educational support related to dealerships."

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