Appeals court rules in favor of antitrust fine on Lotte

An appellate court ruled Monday that the antitrust regulator’s decision to impose fines on Lotte Department Store for bullying subcontractors was legitimate.

Though the department store filed a litigation against the Fair Trade Commission demanding withdrawal of the fine levy, it lost the suit at the Seoul High Court following a lower court’s ruling.

Lotte Department sanctioned some suppliers after comparing the 35 businesses’ sales performance from January-May 2012. The sanction included a variety of handicaps such as the obligation to pay higher royalty and relocation of operation spots in the department.

The FTC levied a penalty of 4.5 billion won ($4 million) on the department store for bullying subcontractors by abusing its status as a conglomerate.

In its verdict, the appeals court clarified that the store was found to have repeatedly urge the suppliers to beat competitors’ improve sales performances. Lotte argued that the sales figures were only used for collecting information.

The antitrust authority is moving to weed out irregularities at large companies.

FTC officials have notified the company CEOs of this policy to enhance oversight of three major irregular practices ― unreasonably cutting prices for manufacturing parts, stealing technologies and making orders without written documents.

The regulator also reiterated the importance of “shared growth” between conglomerates and small enterprises.

For the antitrust regulatory segment, Park instructed the FTC to “root out (big businesses’) unethical practices bullying subcontractors.”

Regulatory officials said the regulator was ordered by the presidential office to publicize the unfair deals between conglomerates and suppliers every six months.

Under the president’s initiative, the regulator has launched a full-fledged probe into 23 companies in a bid to reveal some of their headquarters’ alleged bullying of retail stores.

The 23 firms belong to eight industry sectors such as automobiles, dairy, liquor, cosmetics and beverages.

By Kim Yon-se (kys@heraldcorp.com)