Supreme Court Confirms CJ O Shopping to Pay 4.2 Billion KRW Fine for 'Sales Promotion Fee Abuse'

[Asia Economy Reporter Kim Hyung-min] TV home shopping company CJ O Shopping has been finally defeated in a lawsuit against the Fair Trade Commission (FTC) and will have to pay a fine of 4.2 billion KRW.

The Supreme Court's 3rd Division (Presiding Justice No Tae-ak) announced on the 6th that it upheld the lower court's ruling, which partially ruled against CJ O Shopping in the lawsuit to cancel the fine payment order filed against the FTC.

The court stated, "Upon reviewing the reasons for the lower court's ruling in light of relevant laws and records, there is no error in the legal interpretation regarding disadvantageous acts under the Fair Trade Act as claimed in the grounds for appeal."

In June 2015, the FTC imposed a fine of 4.6 billion KRW on CJ O Shopping for violating the Large-scale Distribution Business Act by failing to provide written contracts on time and unfairly shifting sales promotion costs to suppliers.

Another reason for the fine was that CJ O Shopping induced consumers to use mobile orders, which have higher commission rates, instead of the usual telephone orders, thereby increasing the commission burden on suppliers.

CJ O Shopping filed a lawsuit with the Seoul High Court to contest the fine. Sanctions such as fines or warnings imposed by the FTC have the effect of a first-instance court ruling.

The Seoul High Court acknowledged CJ O Shopping's violations regarding failure to provide written contracts and shifting sales promotion costs but did not accept the claim that inducing mobile orders increased the commission burden.

It was noted that the TV commission rate, which reflects weighted broadcasting time, was sometimes higher than the mobile commission rate, making it difficult to conclude that mobile sales were necessarily disadvantageous to suppliers.

Accordingly, the court canceled the 390 million KRW fine related to inducing mobile orders, reducing the total fine to 4.2 billion KRW.