Ottogi, LG Uplus, CJ CheilJedang fined for not delivering standard form of contract

By Kim Jae-heun

The Korea Fair Trade Commission (KFTC) imposed fines on seven firms in the food and beverage, apparel and mobile carrier sectors for avoiding delivery of written contracts with their dealership stores.

The antitrust watchdog launched an investigation to check if the companies are properly fulfilling their obligation to adopt contract standards.

This is part of the government's efforts to establish a culture promoting fair contracts. Suppliers have been avoiding the use of standard contracts set by the KFTC or even failing to sign them, enabling suppliers to use their superior position to bend the market to their favor.

The result showed Hyungji, SK Telecom and KT have failed to use updated contract forms that have been revised in June. Binggrae, Descente Korea, K2 and Hyungji did not implement an electronic contract system and still used written contracts.

Seven firms including Ottogi, LG Uplus and KT adopted electronic contract systems but their usage rate varied from 20 percent to 100 percent. Some firms failed to deliver contracts, delayed them or left out important clauses, which are also violations of the Fair Trade Act.

Ottogi was fined the most with 10 million won ($8,442), followed by LG Uplus 8.75 million won, KT and K2 with 8 million won each and SPC Samlip and CJ Cheiljedang with 7 million won each. Namyang Dairy Products was fined 6.25 million won.

The antitrust watchdog said it will conduct additional investigations on 177 firms in the same three sectors soon and expand its target industries too.

Within this year, six industries of furniture, publishing, boilers, home appliances, oil circulation and medical appliances will adopt standard contract forms. Only six types of businesses currently use them.

“We will be able to prevent the suppliers' unfair trade practices with their dealership stores by inspecting to see if they are properly using standard contracts. Food and beverage, mobile carriers and apparel are the three industries that account for a large portion of dealership stores' transactions, and disclosing the types of major law violations will help,” the KFTC official said. “The KFTC will continue to carry out investigations in other sectors too.”