Setting Sales Prices and Imposing Disadvantages for Violations
Demanding Dealership Sales Information and Business Secrets
Fair Trade Commission: "Undermining Consumer Choice"
Bullsone, a company that sells automotive products such as fuel additives and air fresheners, has been fined over 2 billion won for abusing its power over dealerships by controlling product sales prices and methods.
On May 14, the Fair Trade Commission announced that it would issue a corrective order and impose a fine of 2,071 million won on Bullsone for violating the Fair Trade Act and the Franchise Business Act.
According to the Fair Trade Commission, Bullsone has engaged in what is referred to as "three types of unfair practices" against its dealerships. First, from July 2017 to January 2023, Bullsone set minimum prices for its products when supplying them to dealerships, and imposed disadvantages such as suspending shipments if these prices were violated.
Additionally, Bullsone attached QR codes (identification tags) to each product to track distribution channels. If a product was found to have violated the minimum price, Bullsone would trace which dealership distributed it and impose sanctions. Such actions constitute "resale price maintenance," which is prohibited under the Monopoly Regulation and Fair Trade Act.
When it became apparent that these practices could be deemed illegal, Bullsone attempted to avoid liability by orchestrating a situation where the dealership council would formally request price controls, having the dealerships send official documents to create the appearance that the request originated from them.
Furthermore, Bullsone was found to have engaged in coercive conditional transactions by launching certain products, such as "Bullsone Shot Pro," exclusively for dealerships and completely banning online distribution. Bullsone referred to the practice of selling the same product at different prices through low-cost or online channels as "Nanmae" and managed it at the company level.
Products for which BULLSONE controlled the sales price or method. Provided by the Fair Trade Commission.
As a result, Bullsone was able to maintain product prices at a high level. In fact, during the period of violation, the price of the fuel additive "Bullsone Shot Standard" was kept at 13,000 to 14,000 won per bottle. After the investigation began, the price dropped. Recently, with the unfair practices eliminated, the product can now be purchased on online shopping malls for less than half the previous price, at around 6,000 won (excluding shipping).
It was also found that Bullsone interfered with the business operations of dealerships. Bullsone demanded sales information such as product types, quantities, and amounts, as well as profit and loss data including sales profits and non-operating income. Since the disclosure of such information could put dealerships at a disadvantage in price negotiations and constitutes business secrets, the Franchise Business Act prohibits such interference in management activities.
A Fair Trade Commission official stated, "Bullsone's actions significantly undermined consumer choice. Through this measure, price competition among sellers will be promoted, allowing consumers to purchase products at lower prices, and a more autonomous business environment will be created for dealerships."
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