Fair Trade Commission Orders OB Beer to Delete Unfair Contract Clauses and Implement Corrective Measures
OB Beer, which forced all dealerships to designate joint guarantors and engaged in other unfair practices, has been sanctioned by the Fair Trade Commission.
On the 12th, the Fair Trade Commission announced that it decided to impose corrective orders on OB Beer for abusing its trading position to disadvantage dealerships (violation of Article 9 of the Dealer Act), including prohibiting certain actions and modifying or deleting contract clauses. Additionally, OB Beer must notify the dealerships of the corrective orders.
OB Beer is accused of applying a contract clause requiring unconditional joint guarantors to all 452 dealerships from February 2016 until recently. Through this, a total of 644 people acted as joint guarantors.
The issue arose because even 158 dealerships that could sufficiently manage the risk of uncollected payment claims were required to set up a total of 203 joint guarantors.
Dealerships that had both 'physical collateral' exceeding the average monthly sales and a 'credit limit'?the maximum amount of liquor that can be ordered based on collateral ratio, delinquency rate, and sales volume?were excessively burdened with collateral despite being able to sufficiently manage uncollected risk.
OB Beer is also accused of not specifying the maximum debt limit for 622 joint guarantors at 436 dealerships during the same period.
This means that if a dealership owner is unable to repay the payment claims, the joint guarantor would bear unlimited responsibility and have to repay the full amount.
Ultimately, the Fair Trade Commission judged that dealerships had no choice but to face difficulties in opening and operating dealerships because it was hard to find joint guarantors.
Among the 622 joint guarantors, 591 (95%) were family members such as spouses of dealership employees. The Fair Trade Commission also reported cases where family signatures were forged because joint guarantors could not be found.
However, considering that there were no cases where joint guarantors actually repaid debts on behalf of others due to these contract practices, the Fair Trade Commission decided to impose corrective orders as the level of sanction.
A Fair Trade Commission official said, "This is a case where excessive collateral burdens on dealerships were alleviated and limits were set to protect the rights and interests of dealerships while improving the trading practices of suppliers."
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