Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
Lotte, Shinsegae, Hyundai fined for unfairly shifting marketing costs to tenants
Shinsegae Simon's Premium Outlets in Yeoju, Gyeonggi Province / Yonhap
By Lee Min-hyung
Lotte, Shinsegae and Hyundai have been fined for unfairly shifting their marketing costs to their store tenants without any prior notification, the antitrust watchdog said Sunday.
According to the Fair Trade Commission (FTC), four major outlet operators — Lotte Shopping, Shinsegae Simon, Hyundai Department Store and Han Moo Shopping — passed a total 588 million won ($420,230) in costs onto their tenants while running special sales promotion events between 2019 and 2020.
The watchdog said it decided to impose fines totaling 648 million won as the unfair activity is a clear breach of law.
“This is the first time that the FTC has uncovered such an illegal act in transactions between outlet operators and store tenants,” an FTC official said. “They are sanctioned for shifting the financial burden to tenants without reaching any written agreement in advance.”
Lotte Shopping was hit hardest with a fine of 337 million won. Shinsegae Simon came in second, facing a fine of 140 million won. Hyundai Department Store also received a fine of 120 million won.
“The latest sanction against the outlet operators comes with significance in that the regulatory measure alerted the industry’s top three outlets to such unfair acts while operating their lease business here,” the official said.
The FTC also pledged to step up its monitoring of major retail players to protect the right of tenants.
“We will keep monitoring unfair and undue transaction activities between retail business operators and their tenants, and take stern measures against any acts violating relevant laws,” it said.
To be specific, Lotte Shopping passed discount event costs worth 118 million won to 216 tenants while running two promotional events in June and October 2019. A total of 177 tenants had to share a combined financial burden of 205 million won from Shinsegae Simon while it held a Members Day event for three days from June 5, 2020.
Hyundai Department Store and Han Moo Shopping also shifted their combined discount costs worth 264 million won to their 80 tenants while running a promotional event for three days between May 31 and June 2, 2019, according to the FTC.
All such events were designed mostly by the outlet operators, and it is reasonable to say that store tenants were de facto forced to accept their proposals, according to the antitrust authority. The reaction came in response to some outlets’ complaints that the events were held upon the request of some tenants.