"Intensified Unfair Trade in 'Online Distribution' Rapidly Growing Due to COVID-19 Impact"

Fair Trade Commission Announces Results of 2021 Written Survey on Distribution Sector Transaction Practices

Online Distribution Shows Low Usage Rate of Standard Contracts and Relatively High Responses of Unfair Practices Such as Unjust Payment Reduction, Delayed Payment, and Unjust Returns

Unfair Practice Experience Rate for Delayed or Non-Payment of Payment (Unit: %)

[Sejong=Asia Economy Reporter Joo Sang-don] It has been revealed that unfair trade has intensified in the non-face-to-face online distribution sector, whose market size has expanded due to the impact of COVID-19 and other factors.

On the 28th, the Korea Fair Trade Commission announced the results of the '2021 Distribution Sector Written Survey' conducted on suppliers (7,000 companies) trading with major large-scale distribution companies (32 brands). This survey was conducted over three months from August to October this year via electronic and postal methods.

The response rate for improvements in trading practices based on the survey results was 92.1%, down 0.9 percentage points from 93.0% the previous year. Outlet and complex malls (95.7%), large marts and corporate supermarkets (95.5%), convenience stores (95.3%), and TV home shopping (94.2%) showed above-average rates, but online shopping malls were low at 82.0%.

The usage rate of standard contracts also decreased by 1.0 percentage point from the previous year to 98.0%. Department stores (100%), TV home shopping (99.3%), outlet and complex malls (99.2%), and large marts and SSMs (98.6%) were above average, but online shopping malls were low at 94.9%.

The response rate indicating experience of unfair practices such as failure to provide written contracts or providing them after the start of transactions rose by 0.3 percentage points from 0.9% last year to 1.2%. In particular, online shopping malls showed a relatively high rate of 2.2%.

The response rate for experiencing unfair practices such as unjust reduction of product payments was 1.5%, down 0.1 percentage points from 1.6% the previous year. However, online shopping malls were higher than average at 3.8%.

The response rate for experiencing unfair practices such as unjust returns of delivered products was 1.2%, down 0.2 percentage points from the previous year, but online shopping malls were relatively high at 2.6% compared to large marts and SSMs (0.4%) and convenience stores (0.8%). Additionally, the response rate for being unfairly required to bear sales promotion costs was lower than the average (1.7%) at department stores (0.6%), T-commerce (0.9%), and large marts and SSMs (1.0%), but reached 4.1% in online shopping malls.

In the case of online shopping malls, the response rate for experiencing exclusive trade demands such as requiring price increases at other companies or reductions in their own supply prices to maintain the lowest price was also relatively high at 5.7%.

A Fair Trade Commission official stated, "Unfair trade is expanding in the non-face-to-face online distribution sector, whose market size has increased due to COVID-19 and other factors. Therefore, beyond the offline-centered distribution policies pursued so far, it is necessary to focus policy efforts on improving trading practices in the online distribution sector." He added, "The Fair Trade Commission plans to strengthen law enforcement, improve systems, and induce voluntary win-win cooperation in the online distribution sector."

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