Investigation into Exclusive Dealing Underway
Zigzag: "Industry-Wide Practice, Not Our Issue"
Kakao Style, which operates the fashion platform Zigzag, has been confirmed to be under investigation by the Fair Trade Commission over allegations of 'gapjil' against its partner vendors.
On the 6th, Zigzag stated in a phone call with Asia Economy, "We are being investigated due to a report from a competitor regarding exclusive conditional transactions," and added, "We have been cooperating sincerely with the investigation, which is still ongoing."
Exclusive conditional transactions refer to dealings where the trading partner is required not to engage with competitors of the company or its affiliates as a condition of the transaction. Zigzag is suspected of prohibiting participation in discount events by competitors such as Musinsa and Ably with the same products during its own promotional events like discount sales. Essentially, it induced transactions to occur only within Zigzag. Regarding this, Zigzag maintains that exclusive participation in events is a common business practice in the industry and not an issue unique to their company.
However, voices within the industry are raising concerns that Zigzag's actions cannot be explained merely as a common industry practice. In November last year, there was evidence that sellers who did not participate in the 'Jikjack Black Friday' event were notified that they would face disadvantages. An industry insider said, "It is questionable whether pressuring sellers by threatening disadvantages if they do not participate in events, rather than contracting through mutual agreement, can be explained as a common industry practice."
The Fair Trade Commission plans to review the materials obtained in this case to determine whether Kakao Style's actions constitute exclusive conditional transactions prohibited under the Fair Trade Act and will decide on the imposition and severity of sanctions accordingly.
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