Fair Trade Commission imposes a 450 million KRW fine on Starfield for manager abuse

[Asia Economy Sejong=Reporter Dongwoo Lee] The Fair Trade Commission announced on the 9th that it has issued corrective orders and imposed fines totaling 450 million KRW on three companies?Shinsegae Property, Starfield Hanam, and Starfield Goyang?for shifting the costs of sales promotion events onto store tenants and failing to provide lease contracts on time.

According to the Fair Trade Commission's investigation, Shinsegae Property required store tenants to bear more than half of the costs for promotional events such as '2019 SSG Day' and '3rd Anniversary Customer Appreciation' held from October to November 2019 for Shinsegae Property, and from September 2019 to May 2020 for Starfield Hanam and Goyang, without prior written agreements on the promotion period, items, or costs.

These three companies were also found to have delayed issuing store lease contracts by 1 to 109 days when contracting with some tenants (a total of 94) between May 2019 and June of last year. This is the first detected and sanctioned violation of the Large-Scale Distribution Business Act applied to transactions between large-scale distributors and store tenants since April 2019.

Separately, the Fair Trade Commission decided not to further investigate Starfield Hanam's alleged abuse of bargaining position (violation of the Fair Trade Act) for charging tenants the same management fees during interior construction periods as during normal business operations, and instead applied the consent decree system.

The consent decree system allows a business operator to propose reasonable corrective measures such as restoration and damage relief, enabling the case to be promptly closed without confirming illegality.

Following Starfield Hanam's application for the consent decree, the Fair Trade Commission announced a provisional consent decree plan that includes refunding 50% of the management fees paid by tenants during construction in cash or providing advertising worth 75% of that amount (each capped at 500 million KRW), and spending around 300 million KRW to support welfare and benefits for tenants and their employees.

The Fair Trade Commission stated, "We not only detected and sanctioned violations of the Large-Scale Distribution Business Act by complex shopping mall operators but also applied the consent decree system to areas where self-correction is possible, thereby promptly and effectively remedying damages and improving transaction order."