Fair Trade Commission Sanctions GM Subsidiary for Shifting Promotion Costs to Dealerships

The Fair Trade Commission announced on the 18th that it has decided to impose a corrective order and a fine of 265 million KRW on GM Asia Pacific Regional Headquarters for holding discount events without consulting dealerships and forcing them to share promotional costs.

GM Asia Pacific Regional Headquarters is a 100% subsidiary of the American GM that imports and sells Cadillac brand vehicles, GM's premium line, in South Korea.

According to the Fair Trade Commission, from April 2016 to July 2018, the headquarters held monthly Cadillac vehicle discount events and required dealerships to bear part of the cost amounting to 482.27 million KRW.

The cost borne by dealerships during the discount events exceeded 5% of the recommended retail price. The dealership council requested restraint on such excessive discount events and prior consultation when necessary, but the headquarters continued promotional events without consultation.

The Fair Trade Commission stated, "A supplier in a superior position in a transaction must not hold promotional events at its discretion and force dealerships to bear discount costs without consultation," and added, "We plan to continuously monitor acts of coercing dealerships to provide benefits in the future."

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