GS Home Shopping Shifts 1.9 Billion KRW in Supplier Promotion Costs... Fine Imposed is 1.5 Billion KRW

[Asia Economy Reporter Eunju Lee] The Fair Trade Commission (FTC) has imposed a fine of 1.58 billion KRW on GS Home Shopping for shifting 1.9 billion KRW worth of promotional costs onto suppliers.

On the 6th, the FTC announced that it decided to impose a corrective order (cessation and prohibition of the act) along with a fine of 1.58 billion KRW on GS Retail, which operates GS Home Shopping, for violating the Large-scale Distribution Business Act (prohibition of shifting promotional costs). GS Retail extended promotional events beyond the broadcast time specified in the prior agreement without notifying suppliers and made them bear the associated costs.

Suppliers were required to bear costs according to the burden ratio stated in the promotional agreement (usually 50:50) even for promotional events conducted 30 minutes before and after the broadcast without their knowledge. Furthermore, GS Retail did not inform suppliers of the 'registration time' for each order, only providing the broadcast date, making it difficult for suppliers to determine from the settlement details whether promotional events were held during the 30 minutes before and after the broadcast.

The promotional costs shifted to suppliers by GS Retail from 2017 to November 2022 amounted to 1.9785 billion KRW. The FTC stated, "This action is significant as it uncovered the covert shifting of promotional costs by a large-scale distributor onto suppliers," and added, "The FTC will continue to monitor violations by large distributors and impose strict sanctions if illegal activities are found."