FTC probing chain stores over charges

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FTC probing chain stores over charges

The Fair Trade Commission (FTC) has since Monday been investigating whether Hyundai and Shinsegae department stores are still charging small vendors overly high commission fees to display their products, industry sources said yesterday.

“The agency has launched a two-week probe into the two department store chains,” said one industry official. “It has been asking them to lower their rates and apply the cut to more companies.”

The move comes less than a year after the antitrust watchdog ordered the nation’s top three department stores, including Lotte, to reduce their commission fees by up to 7 percentage points last November. Lotte was omitted from the ongoing probe.

The three vowed to apply the lower rates to 1,054 SMEs, or roughly half of the vendors they have contracts with, but speculation is rising that the promises have in many cases not been kept.

The department stores argue that the FTC has been unfairly targeting them, urging them to drop their rates beyond the level agreed on late last year.

One of the stores complained that it has already cut its rate from 32 percent to 26 percent, and that going lower is simply not feasible given the current economic downturn and the resulting slump in sales.

“The situation is really becoming life or death,” said an employee at one of the stores being investigated. “All the retailers are panicking about the probe as we can’t afford to bend any more.”

Other industry figures claim the investigation is the FTC’s way of pressuring the stores.

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

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