Home-shopping channels agree to cut commission fees

Smaller-than-expected fee cuts will affect less than 50 percent of
vendors: FTC


The nation’s major home-shopping channels and supermarket chains have agreed to reduce commission fees for small- and medium-sized vendors by three to seven percent, antitrust authorities said Thursday.

The Fair Trade Commission, however, pointed out that the smaller-than-expected fee cuts would affect fewer than half the vendors, denouncing companies for their lack of willingness to share growth with smaller firms.

According to the antitrust regulator, the nation’s top five home-shopping channels GS, GJO, Hyundai, Lotte and NS will lower commission fees by 3-7 percentage points for 455 traders.

In a FTC survey released on Tuesday, they were found to have charged venders an average 37 percent of their sales via TV channels and other costs such as those for the discount benefits for ARS customers.

Three retail giants E-Mart, Homeplus and Lotte Mart have also agreed to ease commission fees for 850 contracting companies from 10 percent to three to five percent.

Companies’ speedy decision, however, was considered a “half success” for the FTC as less than half the small businesses are expected to benefit from their cut plans.

Supermarket chains showed little resistance to the agreement, saying the commission they receive from smaller vendors makes up a small portion of their total sales.

But home-shopping channels whose sales have been largely dependent on commission fees expressed concerns that their profits could drop by up to 3 percent.

“The airtime fees we pay to network operators increase every year. Coupled with the latest commission cuts, we are worried about potential sales losses,” said an official of a home-shopping channel.

The FTC plans to strengthen its surveillance to prevent companies from seeking “back margins” by charging additional costs for distribution and sales people.

The agency had agreed on fee cuts with the nation’s big three department stores Lotte, Shinsegae and Hyundai on Nov. 8 after a month-long tug of war. 

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