Fair Trade Commission Imposes Heavy Fine on Yeongchang for Blocking Online Discounts
The Fair Trade Commission has imposed sanctions on Yeongchang for setting online consumer prices and forcing products not to be sold below these prices.
On the 18th, the Fair Trade Commission announced that it decided to issue a corrective order and impose a fine of 166 million won on HDC Yeongchang for designating the minimum online selling price to digital piano dealers and enforcing compliance, thereby preventing price discount competition among dealers.
According to the Fair Trade Commission, Yeongchang set the minimum online selling prices for its digital pianos (synthesizers, stage pianos, etc.) and accessories such as speakers and headphones in April 2019, and notified the dealers selling these products online to consumers at least five times between May 2019 and April 2022.
The notices included penalty provisions stating that dealers violating the minimum selling price would have their product supply suspended for periods ranging from 15 days to 3 months. Subsequently, Yeongchang monitored the dealers' selling prices in real time and actually suspended product supply 289 times to dealers who lowered their prices.
As online sales of digital pianos increased due to the spread of the COVID-19 pandemic, Yeongchang strengthened penalties in 2021 to enhance the effectiveness of enforcing minimum selling prices by allowing contract termination with dealers in case of violations.
These actions constitute resale price maintenance, where a business operator forces trading partners to sell supplied goods at a specific price.
The Fair Trade Commission explained that Yeongchang, as the number one business operator in the domestic digital piano market, accounted for 47.2% of sales among the top three companies in 2022, and given its significant influence on the overall market, this sanction is meaningful.
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In fact, after the Fair Trade Commission's investigation, competition among dealers has been revitalized, leading to lower and more diverse online selling prices for Yeongchang digital pianos. According to the Fair Trade Commission, the ‘M120’ model, which had a unified price of 1.6 million won among all sellers around July 2021, is now sold at a minimum price of 1,048,980 won as of this month, and the ‘CUP320’ model, which had a unified price of 2.2 million won, is now sold at a minimum price of 1.49 million won.
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