FTC rejects Hyundai Mobis’ fair trade proposals
The country’s Fair Trade Commission (FTC) rejected Hyundai Mobis’ self-corrective measures for fair trade with its dealers. The auto parts distributor will face regulatory sanctions if it fails to come up with better plans.
The FTC announced Monday it determined that the self-corrective measures submitted by Hyundai Mobis for its abuse of dealers are not effective enough.
The auto parts maker set up “excessive sales targets” between 2010 and 2013, and its employees unilaterally allocated or demanded dealers purchase more than they needed. The FTC determined it was a “forced sale.”
To avoid the FTC penalty, Hyundai Mobis suggested it would submit self-corrective measures to compensate dealers and improve its trade practices. The FTC may close the case by accepting the proposal.
The auto parts maker had submitted its plan in June, in which it suggested compensation for the dealers. It included contributing an additional 10 billion won to the fund for mutual growth with dealers and expanding support for them such as helping in the operation of computer systems and providing management consulting.
It also suggested penalizing employees who forced dealers to increase their purchases.
The FTC, however, determined Hyundai Mobis’ plan was not enough to effectively compensate dealers or fundamentally improve transactions between the headquarters and the dealers.
It pointed out Hyundai Mobis had been informed that its excessive sales target is the root of the problem at previous meetings between headquarters and the dealers.