Hanssem and 2 Other Furniture Companies Penalized by Fair Trade Commission for Violating Agency Act

by Jo Youjin

Published 14 Apr.2024 12:00(KST)

[Image source=Yonhap News]

Hanssem, Fursys, and Enex, three furniture companies, have been sanctioned by the Fair Trade Commission for failing to properly pay sales incentives in transactions with their dealerships.

On the 14th, the Fair Trade Commission announced that it would impose corrective orders on these three companies for violating the "Act on the Fair Transactions in Dealerships" (hereinafter referred to as the Dealership Act).

Hanssem and Fursys signed dealership contracts that did not pay the agreed sales incentives if the dealership failed to fully pay for the goods by the payment date. Even if the dealership made full payment after the due date, they did not pay the full amount of sales incentives regardless of the proportion of the unpaid amount or the number of days delayed.

The unpaid amounts total 266.09 million KRW for 78 dealerships of Hanssem and 43.03 million KRW for 25 dealerships of Fursys.

The Fair Trade Commission judged that these companies violated Article 9, Paragraph 1 of the Dealership Act by unilaterally setting transaction conditions unfavorable to the dealerships, despite the fact that the payment of goods by the dealership to the headquarters and the payment of sales incentives by the headquarters to the dealership are unrelated.

Additionally, Hanssem forced dealerships to disclose sales amount information, and Enex imposed sales penalties totaling 390.85 million KRW on 27 dealerships that failed to meet quarterly sales targets.

The Fair Trade Commission decided to sanction Hanssem for its act of demanding sales amount information, considering it interference in business activities (violating Article 10, Paragraph 1 of the Dealership Act). Enex’s act of enforcing sales targets was deemed a forced sales target act violating Article 23, Paragraph 1, Subparagraph 4 of the Monopoly Regulation and Fair Trade Act and Article 8, Paragraph 1 of the Dealership Act.

The Fair Trade Commission explained, "This action is the first case since the enactment of the Dealership Act to sanction furniture manufacturers for abusing their transactional position and infringing on the interests of dealerships."