Fair Trade Commission imposes a 2.4 billion KRW fine on Homeplus for 'supplier bullying'

Homeplus headquarters located in Gangseo-gu, Seoul.
Photo by Asia Economy DB

[Asia Economy Sejong=Reporter Lee Junhyung] Homeplus, which shifted promotional costs to suppliers, will be sanctioned by the Fair Trade Commission.

On the 9th, the Fair Trade Commission announced that it decided to impose a corrective order along with a fine of 2.416 billion KRW on Homeplus for violating the Large-scale Distribution Business Act. According to the FTC's decision, Homeplus must notify suppliers that it has received the corrective order.

Previously, Homeplus Express, a corporate supermarket (SSM) under Homeplus, unfairly shifted approximately 1.7 billion KRW in promotional costs to 45 suppliers including Ottogi and Yuhan-Kimberly from 2017 to 2020. Without agreements with suppliers, it conducted price discount events and lowered the supply price, thereby shifting part or all of the promotional costs. According to Article 11 of the Large-scale Distribution Business Act, large-scale distributors must agree with suppliers on whether to bear promotional costs before conducting promotional events.

The problem is that lowering the supply price to shift promotional costs is difficult to distinguish from supply price decisions made through normal negotiations. The FTC views Homeplus Express as exploiting this point.

Homeplus also delayed issuing contract documents. According to the FTC, Homeplus Express delayed issuing contract documents for 86 contracts with suppliers by a minimum of 1 day and up to 72 days. Article 6 of the Large-scale Distribution Business Act requires large-scale distributors to issue written contracts specifying contract details immediately upon concluding contracts with suppliers.

An FTC official said, "This action is significant in uncovering the covert practice of shifting promotional costs through supply price reductions in the distribution industry," adding, "It is expected to contribute to improving transaction practices in the distribution sector." The official also stated, "Going forward, we plan to thoroughly examine whether chronic unfair practices such as shifting promotional costs exist not only in large discount stores and SSMs but also in complex shopping malls and outlet sectors."

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