Fair Trade Commission to Address 'Distribution Giant's Abuse'... Establishes Penalty Standards for Management Interference

A legal foundation to punish the unfair practices of distribution giants, such as 'management interference with suppliers,' will be established next month.

According to the Fair Trade Commission (FTC) on the 4th, a follow-up amendment to add 'types or criteria of management interference activities' to the notification of surcharge imposition standards for large-scale distribution business law violators (hereinafter referred to as the Large-Scale Distribution Business Law Surcharge Notification) is expected to be completed as early as next month.

Through this amendment, management interference activities stipulated in the Large-Scale Distribution Business Law, scheduled to take effect on the 9th of next month, will be explicitly designated as subject to surcharge imposition.

Kang Ki-jung, Chairman of the Fair Trade Commission, is responding to a lawmaker's question at the Political Affairs Committee's audit held at the National Assembly in October last year. Photo by Hyunmin Kim kimhyun81@

The FTC explained, "By amending the Large-Scale Distribution Business Law Surcharge Notification to include management interference activities as a principle subject for surcharge imposition, and by defining the violation score for management interference activities as ‘High (3 points)’ in the detailed evaluation criteria table, we have also established the legal basis for imposing surcharges on management interference activities, thereby enhancing the effectiveness of law enforcement."

The newly established detailed types of management interference include acts that unfairly restrict suppliers' management activities such as sales items, facility size, and business hours, as well as acts that interfere with transaction conditions of products sold through other distributors.

The FTC introduced a regulation last August prohibiting large-scale distributors from unfairly interfering with suppliers' management activities by abusing their trading position or causing affiliates or other businesses to do so. This regulation will take effect on February 9.

Since his appointment in September 2022, Chairman Han Ki-jung of the FTC has targeted unfair practices by distribution giants, including initiating an ex officio investigation into SSG.com of the Shinsegae Group, in line with the Yoon Seok-yeol administration’s policy to crack down on unfair acts by market-dominant companies.

The FTC’s assessment is that as the online distribution market rapidly grows and competition intensifies, cases of large-scale distributors unjustly involving themselves in suppliers’ management activities, such as demanding price increases from competitors, have become frequent.

The FTC expressed expectations that "once the subordinate legislation is finalized in February this year and the amended Large-Scale Distribution Business Law is enforced, the independent and free decision-making of suppliers and store tenants trading with large-scale distributors will be further guaranteed."

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