FTC slams big retailers for ‘faking’ fee cutbacks

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FTC slams big retailers for ‘faking’ fee cutbacks

The Fair Trade Commission (FTC) denounced major department stores, large supermarkets and home shopping channels yesterday for acting evasively by only lowering their sales commissions for a limited number of small manufacturers who operate on their premises.

The commission said they reserved most of the reductions for SMEs with sales volume below 1 billion won ($880,000) a year. It urged them to apply the discounted fees across the board to promote shared growth among large and small companies.

The lowered fees were initially agreed last September among the CEOs of 11 large retailers, including the nation’s three major department stores, and more than 2,300 SMEs that supply them.

The FTC asked the retailers to submit a report in February explaining how they would scale back their commission fees. Two months after the deadline had passed, they vowed to cut them by between 3 and 7 percent.

“Large retailers faked the sales commission cut, because it was never meant to apply to all of its SME suppliers,” said Jung Jae-chan, vice chairman of the FTC.

Suppliers who post annual trade of less than 1 billion won with the retailers made up 90 percent of the beneficiaries of the lower fees, the FTC said.

The watchdog said it will watch to make sure the retailers don’t charge SMEs higher fees in other areas.

By Lee Sun-min [summerlee@joongang.co.kr ]

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