FTC chief asks department stores to cut fees for suppliers during discount sales

November 24, 2013 Leave a comment

FTC chief asks department stores to cut fees for suppliers during discount sales

Chun Beom-joo

2013.11.21 18:09:08

Fair Trade Commission Chairman Noh Dae-rae has suggested that local department stores should slash merchant fees for its suppliers in line with their discounted supply of goods in time of discount sales. Large retailers are on alert, while the anti-trust watchdog agency has opened its first probe into them after the implementation of a law to emphasize fair transactions. During the FTC’s full-member meeting held Wednesday, Noh said, “I do not see a problem with department stores lowering merchant fees since suppliers also supply goods at a lower price during discount sales.” A vice president of a department store who was attending reportedly said he would take the matter back for discussion. The suggestion, if accepted, would force department stores to lower the merchant fee rate from 30% to 21% if a supplier provided a product with a price tag of KRW100,000 at KRW70,000 during the sale event. In this case, the department store would see a slash in its profit from KRW21,000 to KRW14,700. Noh’s suggestion is seen as a compromise after the commission’s failed attempt to fine large retailors for burdening suppliers to pay excessive expenses during a discount sale. The FTC tried to fine them 21.7 billion won but the commission’s full-member meeting ordered re-examination of the case due to lack of evidence.

 

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