Namyang agrees to compensate agents
Namyang Dairy Products CEO Kim Woong, left, and Namyang Sales Agent Committee Chairman Lee Chang-sup, second from right, pose at LW Convention in downtown Seoul, Thursday, after they reached a settlement for compensation for losses caused by the firm’s unfair business practices. The signing ceremony was also attended by the main opposition Democratic Party leader Kim Han-gil, second left, and the party’s floor leader Woo Won-sik, third from left. / Korea Times photo by Shim Hyun-chul
By Kim Tae-jong
The country’s largest diary firm, Namyang Dairy Products, agreed Thursday to form a joint committee with its sales agents to compensate them for losses from the firm’s unfair business practices.
After rounds of negotiation, the two sides reached an agreement to foster a fair business relationship, company officials said. Namyang’s sales agents have suffered heavy losses after consumers launched a nationwide campaign to boycott the firm’s products. The campaign was triggered by the release of an audio clip, in which a salesman of Namyang can be heard swearing at a retailer as he forced sales on him, in early May.
Under the agreement, Namyang’s sales agents who suffered damage due to the boycott will be compensated. The firm also promised to drop its unfair sales practices and start programs to support sales agents for co-prosperity.
The Namyang scandal prompted lawmakers to take action to protect the rights of retailers amid public uproar. Analysts say the case helped reform deep-rooted abusive business traditions in the retail business. However, Namyang faced a serious setback in sales and damage in its reputation as the leading dairy brand.
In April, a group of wholesalers for the diary firm staged a protest, accusing the company of abusive business practices against its sales agents. They argued the firm forced its wholesale agents to buy more products than they actually needed ― and even products close to their expiry date.
Earlier this month, the Fair Trade Commission imposed a fine of 12.3 billion won on Namyang for its forced sales orders and other unfair business practices. The nation’s anti-trust watchdog also said it has handed over the case to the prosecution.
“We will never forget this incident,” the firm’s CEO Kim Woong said at a news conference in Seoul. “We will root out unfair business practices and make the best business environment for our sales agents.”
The firm began negotiation with sales agents on May 21 after it became a target of public anger and its stock prices and sales declined.
Following the agreement, sales agents also agreed to drop all the lawsuits against executive members and employees at Namyang.
The two sides will designate an outside expert to calculate the amount of losses caused between Jan. 1 in 2008 and the end of last year and the compensation for them.