FTC to slap fines on North Face
By Park Si-soo
The country’s best-selling outdoor product brand, The North Face, has allegedly violated the Fair Trade Law and is expected to face a hefty fine.
The American clothing and gear company is suspected of forcing its sales outlets and agents to sell its products only at the prices it sets. Korean law bans such retail price fixing on the grounds that it hampers free competition among retailers.
The Fair Trade Commission (FTC) will reportedly hold a decision-making meeting of senior auditors soon to decide whether to slap a fine on the company for enforcing an illegal pricing policy.
“We have already confirmed that The North Face violated Fair Trade Law,” an FTC official was quoted as saying in a news report, Tuesday. “We will resolutely deal with the matter without delay.”
The FTC refused to confirm this, citing an internal rule banning officials from speaking to the media about pending cases. Lee Young-ran, a PR agent dealing with external affairs at The North Face, said the firm has released no official statement regarding the issue.
The firm, in the worst case scenario, will be fined up to two percent of revenue generated under the disputed pricing system, FTA officials said.
A decision of the reported meeting is legally binding. To overturn the ruling, the company must take the case to court.
It’s unclear how much revenue the firm has generated under the policy, but last year it reached a record high of 600 billion won ($526 million), widening the gap with runner-up Kolon Sport.
The biggest fine slapped for a similar violation was 690 million won on Ottogi, a prepared food enterprise.
The FTC’s investigation into The North Face started in February at the request of Seoul’s Young Men’s Christian Association (YMCA). The association claimed in a statement the company has breached the fair trade law by implementing sale price restrictions, citing its own survey of 23 stores in Seoul.
“Every single store offers the same deal within a specific discount range, which is illegal,” the YMCA said in the statement.
The YMCA’s move came shortly after it criticized major foreign outdoor brands including The North Face for inflated pricing policies in Korea, which charge local consumers an average of 50 percent more for overseas brands.