FTC intensifies probe into department stores, vendors for unfair biz terms

SEOUL, Oct. 20 (Yonhap) -- South Korea's antitrust watchdog will launch a stepped-up investigation into the business terms of local department stores and vendors as part of efforts to establish a fair trade environment in the retail sector, its head said Thursday.

The toughened stance comes after the Fair Trade Commission recently announced the results of its fact-finding probe into business terms between major department stores and luxury brand makers. It found that foreign luxury brands have been granted lower transactions rates and many other favors compared to their local counterparts.

"We plan to take a further look at transactions practices between department stores and vendors," FTC Chairman Kim Dong-soo said in an interview with Yonhap. "In this fact-finding process, we will also look into whether they have violated the nation's competition laws."

On Tuesday, the FTC said that about 33 percent of foreign luxury brands paid a sales commission rate of less than 15 percent, but 62 percent of local brands shelled out more than 30 percent in commissions, indicating foreign brands received much more favorable business terms than others.

The results are based on a probe into local department stores and their transactions with the eight largest local clothing and miscellaneous goods makers by sales and eight foreign luxury brands including Chanel, Gucci and Louis Vuitton.

Critics have claimed that major department stores impose excessively high sales commissions on smaller vendors, while offering much lower rates and many other favors to designer brands to lure what they see as more lucrative business partners.

The FTC has been looking into such retail business practices that it considers counter to the government's pursuit of establishing a "fair society" with "shared growth" between small and large companies.

Kim noted that the FTC will work hard to pass a bill that is intended to toughen the crackdown on large-sized retailers for forcing smaller vendors to accept unfair terms by using their market dominance.