Fair Trade Commission: "GS, Lotte, NS, CJ and 3 Other Home Shopping Companies Passed on Promotion Costs and Employee Wages... Corrective Orders and Fines"

TV Home Shopping Sector Dominated by 7 Operators... Highest Commission Rates Among Distribution Channels
Delayed Payment for Product Sales Proceeds and Unfair Returns of Direct Purchase Products

[Asia Economy Reporter Joo Sang-don] Seven TV home shopping companies, including GS Shop, Lotte Home Shopping, NS Home Shopping, CJ OnStyle, Hyundai Home Shopping, Home&Shopping, and Gongyoung Shopping, were sanctioned by the Fair Trade Commission for shifting promotional costs and employee labor costs onto suppliers.

On the 5th, the Fair Trade Commission uncovered violations of the Large-Scale Distribution Business Act by these seven TV home shopping companies and decided to impose corrective orders along with a total fine of 4.146 billion KRW.

According to the Fair Trade Commission, six TV home shopping companies including GS Shop made suppliers bear the entire cost of promotional gifts used in promotional events without any agreement on sharing promotional expenses. Home&Shopping had an agreement on cost sharing but violated Article 11 of the Large-Scale Distribution Business Act by making suppliers bear costs exceeding 50% of the total promotional expenses.

The seven TV home shopping companies violated Article 12 of the Large-Scale Distribution Business Act by dispatching employees such as broadcast guests, demonstration models, and audience members without a written agreement on dispatch conditions and charging the costs to suppliers.

Four companies?CJ OnStyle, Hyundai Home Shopping, NS Home Shopping, and Gongyoung Shopping?violated Article 6 of the Large-Scale Distribution Business Act by failing to provide suppliers with written contracts specifying transaction items and commission terms or by delivering such contracts late.

Additionally, Hyundai Home Shopping outsourced the quality control work for direct purchase products to suppliers without paying for the work, and Home&Shopping did not pay logistics costs included in the quality control expenses. GS Shop returned inventory of direct purchase products to suppliers without justifiable reasons such as product defects. Lotte Home Shopping violated Article 13 of the Large-Scale Distribution Business Act by restricting suppliers’ pricing rights to guarantee minimum supply prices in direct purchase contracts, preventing suppliers from offering lower prices to other businesses.

A Fair Trade Commission official stated, "The significance lies in actively sanctioning violations of the Large-Scale Distribution Business Act, such as shifting promotional and employee labor costs onto suppliers, which were widespread in the TV home shopping sector characterized by an oligopolistic structure and the highest commission rates among distribution channels." The official added, "Going forward, the Fair Trade Commission will closely monitor supplier transaction relationships in emerging non-face-to-face distribution channels such as TV home shopping, T-commerce, and online shopping malls, while continuing to oversee unfair trade practices in traditional face-to-face distribution channels like department stores and large supermarkets."

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