Major retailers face probe over commission charges

The Korea Federation of Small and Medium Businesses has launched a probe into major retailers including Lotte, Hyundai and Shinsegae over alleged anticompetitive practices such as imposing unfairly high commission fees on dealers, it said Tuesday.

The non-profit organization will investigate whether merchants selling their products through major retailers are being bullied with commission fees far above the industry norm of 20 to 25 percent of the product cost.

“We will look into the commission charges as the Fair Trade Commission has asked us to work with them uprooting mistreatment of smaller businesses by large ones,” the lobby group said.

The FTC has been conducting an extensive inquiry into major retailers and said it will announce the result of the probe by the end of the month. The three are suspected of charging more than 30 percent on the commissions of their suppliers.

“We are talking to more than 300 resident merchants of Lotte, Hyundai and Shinsegae Department Store in Seoul and the wider metropolitan area to find out other business wrongdoings including arbitrary cancellation of orders,” the Kbiz said.

The corporate watchdog has been driving industry-wide investigations into big business groups under Lee Myung-bak administration’s priority policy of promoting broader-based growth and a wide diffusion of wealth.

Its proponents argue that the nation is in need of retooling its growth model, which is heavily centered on large exporters and retailers, eventually widening income gaps and hindering growth of small and medium-sized enterprises.

“We are heavily focusing on reducing income gaps between large and small businesses while cutting unfair price hikes,” FTC chairman Kim Dong-soo told reporters earlier this week.

By Cynthia J. Kim (cynthiak@heraldcorp.com)