Big stores benefiting from blank contracts

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Big stores benefiting from blank contracts

Six major retailers, including Lotte Department Store and E-Mart, have insisted on signing blank contracts with local suppliers to give themselves greater advantages, the Fair Trade Commission said yesterday.

However, their contracts with popular international companies are much more detailed and less one-sided, the FTC added.

It is unusual for the commission to release the results of ongoing investigations, but it said it did so in this case to encourage the offending retailers to voluntarily correct their wrongdoings.

“The situation has been getting too serious,” said Lee Dong-won, director of the FTC’s franchise and retail division.

“The parts they left blank on the contracts, including sharing promotional fees for products, violate a slew of unfair trade practices.”

The six retailers also include Shinsegae Department Store, Hyundai Department Store, Homeplus and Lotte Mart.

Retailers are obliged to give individual vendors a paper contract when they do business together.

And when certain products are promoted, Korean law mandates that both parties state the name and period of the promotion, the number of employees involved and how they are going to share related revenues, the FTC said.

But the large retailers eschewed this by leaving many pages blank and adding conditions at their convenience.

In many cases, the contracts were signed after the event as a formality.

The FTC did not specify when the final results of its investigation will be revealed, but said the fines cannot be revoked.

“We will not give any consideration to revoking the order even if they correct their wrongs,” Lee said.

An employee at one of the retailers said the FTC was behind the times.

“What the Fair Trade Commission pointed out was something that was happening last year,” he said.

“But as we have been signing most of our contracts electronically from this year, such omissions are no longer possible.”

By Lee Sun-min []
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