Lotte Mart Shifts Promotion Costs of '1+1 Event'... Fair Trade Commission Imposes 222 Million KRW Fine

[Asia Economy Reporter Joo Sang-don] The Fair Trade Commission announced on the 5th that it has decided to impose a corrective order and a fine of approximately 222 million KRW on Lotte Mart for conducting a 1+1 promotional event without a written agreement.

According to the Fair Trade Commission, Lotte Mart conducted a total of 75 promotional sales events, including price and coupon discounts and 1+1 offers, with 43 suppliers from January 5, 2017, to March 14, 2018.

In this process, Lotte Mart imposed promotional event costs of about 220 million KRW (approximately 47% of the total event costs) on the suppliers without providing a written agreement, which included the sharing of promotional costs, prior to the event.

Such actions violate Article 11, Paragraphs 1 and 2 of the Large-scale Distribution Business Act, which prohibits imposing cost-sharing on suppliers without a prior written agreement regarding promotional cost sharing before the event.

Accordingly, the Fair Trade Commission imposed a corrective order including a recurrence prevention order, an order to notify suppliers of the legal violation, and a fine of 222 million KRW.

A Fair Trade Commission official stated, "This measure clarifies the obligation to conclude prior agreements and provide written agreements regarding cost-sharing even for discount events and 1+1 events, which are types of promotional events frequently held at large marts and convenience stores. We will strictly monitor unfair practices that may harm suppliers, such as coercion to participate in promotional events and violations of the written agreement obligation during the promotional event process."