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Photo courtesy of Yonhap News |
[Alpha Biz= Kim Jisun] South Korea’s Fair Trade Commission (FTC) has imposed sanctions on Lotte Shopping for unfair business practices against suppliers, including delayed payments and unjustified product returns.
The FTC announced on the 15th that it has decided to impose a corrective order and a fine of 569 million won (about $420,000) on Lotte Shopping for violations of the Large-Scale Retail Business Act. The investigation and sanctions targeted the company’s mart business division.
According to the FTC, from 2021 to 2024 Lotte Shopping signed 101 contracts with 97 suppliers without issuing written agreements specifying transaction terms such as the type of transaction, product items, and contract period. Under the law, large retailers must provide written contracts signed or sealed by both parties.
Lotte Shopping also failed to meet payment deadlines. After receiving products from 80 suppliers under direct purchase or consignment arrangements, the company delayed payments by between 1 and 386 days beyond the legal deadline. In addition, it did not pay 34.34 million won in late-payment interest, which is required when payments are delayed.
The FTC also found unjustified product returns. In direct purchase transactions—where ownership of goods is transferred to the retailer—returns are generally prohibited. However, Lotte Shopping returned 19,853 items worth 224.67 million won to nine suppliers without legitimate reasons. The law only allows such returns when there is objective evidence that they benefit the supplier.
Additionally, between February and April 2021, Lotte Shopping had employees from six suppliers work as promotional staff at its stores without signing prior written agreements outlining working conditions, which is required when supplier employees are dispatched to a retailer’s workplace.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
