South Korea’s antitrust watchdog is investigating allegations that the country’s three largest discount chains cheated consumers and forced suppliers to accept losses, market sources said Thursday.
The Fair Trade Commission sent investigators to E-mart and Lotte Mart on Wednesday to check whether they violated laws governing advertisements.
Last week, it also launched a probe into Homeplus following complaints that the retailer used its superior position to compel suppliers to take smaller profit margins for products sold at its stores.
“Investigators checked files to see whether the stores, which advertised lower prices for a set period of time only, did not mark up prices afterward, which can be seen as deceiving consumers,” a market watcher said, asking not to be named.
Retailers have maintained that in some instances, they had to take aggressive steps to reduce inventory even if it means extending the sales period beyond what was advertised and in certain cases lowering prices even more.
“We are in the process of explaining our predicament to the FTC,” a representative for a retailer said.
In regards to the Homeplus case, which centers on the company’s announcement in early March that it will lower prices of fresh produce by 10 to 30 percent, investigators are trying to determine whether the large retailer unilaterally forced suppliers to take less profits while not accepting similar losses.
Homeplus argued that the company accepted cuts of its own margin, and that it did not treat its suppliers unfairly in this regard. The retailer said it, too, is explaining the details to the FTC.
The latest FTC action comes as lawmakers recently blasted large discount stores for slashing prices of goods they sell, only to pass on the cost to suppliers. They have also said that some ads are exaggerating the truth and deceiving consumers to spend more money.
The FTC, meanwhile, did not officially confirm whether it is investigating the retailers, citing that it does not divulge information about ongoing probes. (Yonhap)
