FTC probes Homeplus on charges to its vendors

The Fair Trade Commission is investigating Korea’s No. 2 discount chain Homeplus to see if it unfairly passed along operating expenses to its small- and medium-sized partners, raising the question whether the antitrust agency will investigate other retailers including E-Mart, Lotte Mart and department stores.

According to sources, some 20 inspectors from the agency were dispatched to Homeplus’s Yeoksam headquarters in southern Seoul on Monday after they received a complaint from small- and medium-sized vendors that Homeplus asked them to pay some expenses for sales representatives that sell their products in Homeplus stores.

Normally, small- and medium-sized partners hire sales reps to promote their products at large discount chain stores, but sources said Homeplus abandoned that tradition and directly managed and hired sales representatives.

Sources said the Korean affiliate of the British retail giant took flak from its partners over the higher costs.

Homeplus is also under suspicion for inflating sales incentives on small- and medium-sized companies.

Sales incentives are a part of commission fees that vendors pay the chains.

If the retailer was found to have committed related unfair practices, the FTC can slap fines on Homeplus to pay up to 90 percent of the expenses passed along to small- and medium-sized vendors.

Homeplus denied the allegations but said it “will fully cooperate with the government’s probe.”

Meanwhile, FTC senior officials yesterday met with executives of 11 big retailers and asked them to comply with the government’s shared-growth policy by lessening the burden on small- and medium-sized suppliers, as they promised last year.

At the time, the big retailers were criticized for charging high fees and commissions from small companies compared to what they charge luxury goods companies and large suppliers.

“We don’t have a plan to expand the Homeplus probe to other retailers yet,” a senior official at the FTC said at a press briefing yesterday.

But the official did indicate that the government may step in if the retailers fail to comply with their promises of last year.

“We want retailers to go beyond simply lowering commission fees. We want them to come up with realistic measures that can help small- and medium-sized firms to grow,” he said.

By Kim Mi-ju [mijukim@joongang.co,kr]