Court Dismisses Lawsuit Against Yuhan-Kimberly Dealer Owner for 'Gapjil' Abuse

Seoul Central District Court, Seocho-dong, Seoul.
[Photo by Yonhap News]

[Asia Economy Reporter Choi Seok-jin, Legal Affairs Specialist] The court dismissed a damages claim lawsuit filed by a distributor against Yuhan-Kimberly, who was accused of 'gapjil' by forcibly imposing sales targets.

The court ruled that it was not proven that Yuhan-Kimberly disadvantaged distributors who failed to meet sales targets.

According to the court on the 4th, the Civil Division 31 of the Seoul Central District Court (Presiding Judge Kim Ji-sook) dismissed the plaintiff's claim in a lawsuit where Mr. A, a former Yuhan-Kimberly distributor, sued Yuhan-Kimberly for damages of about 380 million KRW, ruling in favor of the defendant.

The court stated, "Even if we accept the plaintiff's claims, it is not specified what actions the defendant took when the distributor failed to achieve the sales target," and "There is no evidence that the defendant disadvantaged the plaintiff or expressed an intention to disadvantage them because they failed to meet the sales target."

It added, "It is natural for a business operator to urge and encourage distributors to expand product buyers, and providing incentives in that process is a means that can be chosen as part of business activities unless it deviates from normal trading practices to the extent that it hinders fair trade."

Mr. A, who signed a distributor agreement with Yuhan-Kimberly in 2010, wrote a memorandum in January 2014 stating that he would give up operating the distributor due to 'personal reasons.'

Subsequently, Mr. A reported to the Fair Trade Commission alleging gapjil by Yuhan-Kimberly, filed complaints against company executives with the prosecution, and also filed a civil lawsuit claiming damages.

Mr. A claimed that Yuhan-Kimberly unilaterally imposed sales targets on distributors and did not pay sales incentives if sales performance fell below 90% of the target, causing distributors to purchase more than necessary and sell at low prices, resulting in losses.

He also claimed that Yuhan-Kimberly forced him to write the memorandum to give up distributor operations and later stopped supplying goods.

However, the court dismissed Mr. A's claim, stating, "Based on the submitted evidence alone, it is insufficient to recognize that the defendant's acts of setting sales targets and paying incentives constitute forced sales target acts or illegal acts."

Previously, the Fair Trade Commission, which received Mr. A's report, had once cleared Yuhan-Kimberly of charges in 2016. After Mr. A reported Yuhan-Kimberly again to the commission, in 2020, the commission ruled that "setting sales targets constitutes forced sales target acts under the Fair Trade Act, but since Yuhan-Kimberly abolished the sales target setting policy, corrective measures have no practical effect," issuing a 'warning' disposition.

Separately, Mr. A criminally accused Yuhan-Kimberly executives of coercion, but the prosecution dismissed the case in March 2016 due to insufficient evidence, deciding 'no charges.'

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