Hyundai, Lotte, Shinsegae Fined by FTC for Unfair Tenant Practices

Hyundai Department Store, Shinsegae Simon, Lotte Shopping, and Han Moo Shopping were reportedly fined by the Fair Trade Commission (FTC) in South Korea for allegedly passing marketing costs to their tenants. The antitrust agency announced its move to penalize the four retail giants on Sunday, Nov. 26.

The FTC said that Lotte Shopping, Shinsegae Simon, Han Moo Shopping, and Lotte Shopping unfairly transferred KRW648 million or about $497,00 in costs to their tenants. This event took place during special sales promo events that took place between 2019 and 2020.

Details of FTC's Sanction Order

According to The Korea Times, South Korea's regulatory authority for economic competition explained it decided to impose the fine as the four major firms violated the law with their act. Based on the reports, Lotte Shopping received the highest fine, amounting to KRW337 million, and Shinsegae Simon is second with a KRW140 million fine.

Hyundai Department Store's penalty is KRW120 million, while Han Woo Shopping received the least amount of fines, worth KRW59 million. The FTC stressed that the four companies were fined for passing on financial burden to their tenants, and they were not even informed about it.

The Korea Post reported that the FTC determined that the actions of the four major retail business operators violated the obligation to strictly comply with the regulation of having written agreements before the sales promotion events.

"This is the first time that the FTC has uncovered such an illegal act in transactions between outlet operators and store tenants," a commission official stated. "They are sanctioned for shifting the financial burden to tenants without reaching any written agreement in advance."

He added that the "latest sanction against the outlet operators comes with significance in that the regulatory measure alerted the industry's top three outlets to such unfair acts while operating their lease business here."

FTC Vowed to Protect Rights of Tenants

Finally, the antitrust regulator said it will continue to monitor any unfair and undue transactions between retail companies and their tenants. He warned that the FTC will take strong measures against parties that will commit any practice or deeds that violate the laws. This move will protect tenants' rights and interests in the distribution market.

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