The Fair Trade Commission imposed a fine of 1.896 billion won on CJ Olive Young, saying it forced a monopoly on its suppliers. CJ Olive Young was found to have unfairly pocketed more than 800 million won by buying products from suppliers at low prices, holding discount events, and selling remaining products at normal prices.
The Fair Trade Commission announced on the 7th that it has imposed a corrective order and fine of 1.896 billion won on CJ Olive Young, which violated large-scale distribution laws, including forcing suppliers to monopolize the exercise, and decided to file a corporate complaint.
CJ Olive Young has asked suppliers not to proceed with the event with the same items in other H&B (Health & Beauty) store competitors Lalabla and Lobs in the current month and the previous month, when the company hosts the event from around 2019 to the present.
Suppliers had no choice but to comply with CJ Olive Young’s request for an exclusive event to participate in CJ Olive Young’s event. Suppliers who participated in CJ Olive Young’s event were excluded from the opportunity to participate in the competition’s promotional event for two months.
In addition, CJ Olive Young received products from suppliers at a reduced delivery price for the Power Pack event from March 2019 to June 2021. A power pack event is an event in which products are displayed at the most exposed shelves in the store on a monthly basis.
Since then, CJ Olive Young has sold the remaining products at the normal price after the event, but has not returned them to the supplier at the normal delivery price. It has been investigated that the difference between the lowered delivery price and the normal delivery price has been unfairly received.
From January 2017 to December 2022, CJ Olive Young provided “information related to product sales” through its computer system regardless of the supplier’s intention. In return, about 1-3% of net purchases were unfairly received from 760 suppliers out of a total of 785 in the name of “information processing costs.”
The committee judged that CJ Olive Young’s ▲ coercion of monopoly on exercise ▲ non-return of normal delivery prices ▲ unfair receipt of information processing fees violates Article 13 (Prohibition of Exclusive Transactions), Article 17 No. 10 (Prohibition of Non-Profit Provision) and Article 1 (Prohibition of Compulsory Purchase of Goods) respectively. The FTC imposed a fine of 500 million won for forced monopoly of exercise and unfair receipt of information processing fees and 896 million won for non-return of normal delivery prices, respectively.
However, the committee decided to terminate the review process after reviewing whether CJ Olive Young’s EB (Exclusive Brand) policy constitutes abuse of market dominance under the Fair Trade Act. In fact, the committee has effectively cleared the company of abuse of waste land.
The FTC explained that the measure is meaningful in that large distributors used their superiority in transactions to detect and sanction various activities that hurt suppliers in H&B distribution channels to raise awareness to prevent the recurrence of the same or similar activities.
An official from the FTC said, “To protect the rights and interests of suppliers in the distribution market, we plan to continuously monitor unfair practices by large retailers and take stern measures in case of violations of the law.”
SOPHIA KIM
US ASIA JOURNAL
