Little progress in cutting fees at major retailers

The nation’s antitrust watchdog said Tuesday that there had been little progress in its ongoing efforts to reduce commission fees at major retailers despite a voluntary agreement with the industry’s top players.

The Fair Trade Commission found that 2,272 vendors have benefited from commission reductions totaling 35.8 billion won ($31.4 million) on trade at 11 won retail companies since October.

Aimed at supporting smaller firms, the government in September agreed on 3-7 percent commission cuts together with three department stores, three discount store chains and five home-shopping channels.

Lotte Department Store, the No. 1 department chain, cut 10.3 billion won in fees for 403 contractors, while Hyundai and Shinsegae reduced them by 4.72 billion won and 3.81 billion won, respectively.

E-Mart, an affiliate of Shinsegae Group and the nation’s biggest supermarket chain, cut fees worth 3.81 billion won on 330 partner firms, followed by Homeplus with 3.7 billion won and Lotte Mart with 3.6 billion won.

The FTC said, however, the total numbers reflected only a small amount of commission cuts, with most of them resulting from manipulating related data or using the agreement’s loopholes.

“We gave them one month to submit related documents in January but most of them did not meet the deadline and did not cooperate properly, with sloppy reports,” said a FTC official.

“Department stores included the sales of discounted products as if they had offered commission cuts, while supermarket chains also reported the purchase prices of their own private-brand products, whose vendors don’t pay any commission charges.”

The agency plans to tighten monitoring on unfair practices, such as imposing excessive fees for promotional activities and requesting classified management information from vendors, and to unveil comprehensive measures by the end of this year.

“Many companies just pretended to follow the agreement. In order to produce practical effects, we will push them to further lower commission fees,” said Jung Jae-chan, the state-run antitrust watchdog’s vice chairman.

In a separate move, the FTC raided the headquarters of E-Mart on Monday after receiving petitions claiming that the retailer did not lower commission fees as promised.

According to industry sources, E-Mart is suspected of having not offered sufficient commission cuts and charging vendors excessively for promotional activities.

By Lee Ji-yoon (jylee@heraldcorp.com)