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FTC “Hi-Mart’s illegality is very high. We will closely monitor if the corrective order is carried out”
‘Forcing to sell’ products of other companies to the supplier’s employees.·Performance management
In the News Reporter Nam Gung-gyeong ㅣ The Fair Trade Commission imposed a correction order and a fine of KRW 1 billion for the act of ‘GapJil’, a supplier of Lotte Hi-Mart (Hi Mart). Hi-Mart dispatches vendor employees to work as its own employees,·The award was also found to have been unfairly received from the supplier.
According to the Fair Trade Commission on the 2nd, Hi Mart sells products purchased directly from January 2015 to June 2018, and a total of 14,540 employees from 31 suppliers were dispatched on the condition that suppliers pay the full cost of the hand working. .
In this process, Hi-Mart enabled dispatched employees to sell products from other vendors and managed sales targets and performance. In this way, Hi-Mart raised around 5 billion won, which is 50.7% of the total sales amount (11 billion won).
In addition, Hi-Mart also mobilized the issuance of 100 affiliate cards to dispatched employees, around 99,000 subscriptions to mobile communication services and around 220,000 subscriptions to assistance services, as well as Hi-Mart store cleaning, parking management , inventory inspection and attach promotional items. And staff assistants, etc.
The Fair Trade Commission explained that Hi-Mart’s actions violated the Law of Mass Distribution. According to Article 12 of the Large-Scale Distribution Companies Act, in principle, large-scale distribution companies cannot send employees of suppliers to work at their own workplace. However, after a written agreement has been made in advance in terms of the reason to allow the shipment and the conditions such as the number of personnel sent, the work period and the work details, it can only be used for Product sales and administration tasks only for the company to which the sent personnel belongs.
In addition, Hi-Mart also violated article 15 of the Large Distribution Companies Act. The company received 16 billion won on behalf of the ‘special sale’ and ‘reward money’ from 65 vendors and gave it to all Hi-Mart branches, and used it for dinner expenses and excellent employee awards.
Applicable law requires that sales incentives be paid by the supplier in accordance with the terms and conditions only when an agreement is made in the basic contract of the annual transaction for the type and name of the supplier and the sales incentive, the purpose of the payment, the time and number of payments, and the proportion and amount of sales incentives. It is prescribed for power.
Hi-Mart also passed on some logistics costs to its suppliers. From January to March 2015, Lotte Logistics (now Lotte Global Logistics) increased logistics costs and the company received 110 million won on behalf of increasing the cost of logistics agency fees to 46 suppliers.
Likewise, in February 2016, we received about 80 million won retroactively applying the unit price increase for the logistics agency fees of 71 suppliers for up to 5 months.
The FTC explained: “This case has captured the practice of unfairly using employees of large-scale suppliers over a long period of time and even receiving sales and management expenses, such as dinners and dinners, without a basic contract.”
“High Mart dispatched large-scale labor from suppliers and used it regularly for a long period of time. Although the degree of illegality is very high, the same violation of the law has been corrected considering the fact that it is not willing to improve during the investigation and deliberation process “We plan to closely monitor whether the request is fulfilled.”
