Hanssem fined W1.15 bil. for abusing dealers
Furniture maker Hanssem was slapped with a hefty fine for coercing its dealers into shouldering the costs of promotional events after pushing for the events without prior consent, the antitrust agency said Sunday.
This is the first time the Fair Trade Commission (FTC) has punished a company by applying the Fair Agency Transaction Act, which states that promotional events involving agencies or dealers should be based on consent between the headquarters and the dealers.
According to the Fair Trade Commission (FTC), it decided to impose a 1.16 billion won ($978,000) fine against Hanssem for coercing its dealers to pay the costs of promotional events for Hanssem kitchen and bath furniture from January 2015 to October 2017.
Hanssem has been running showrooms dedicated to showcasing kitchen and bath furniture across the country, and launching promotional events, such as providing gifts, sending leaflets or text messages, to attract customers to the showrooms.
In doing so, more than 150 Hanssem dealers were forced to participate in the event and share expenses, without knowing for what purpose their money was used. The combined amount dealers were forced to pay in a month stood at between 95 million won and 149 million won in 2017.
“This is the first time that it has applied the Fair Agency Transaction Act for a specific case and made sure that a promotional event involving both headquarters and dealers should be based on consent between the two entities,” an FTC official said. “The case is expected to be a model case in preventing headquarters’ abusive practices on dealers.” Hanssem is Korea’s largest furniture maker, whose 1.63 trillion won sales accounted for 23 percent of the domestic furniture market, which is valued at 7 trillion won.
Over the FTC’s decision, however, Hanssem said it will file an administrative suit, claiming it had shared opinions with dealers over the expenses for promotional events, and the dealers agreed on the necessity of the events and to equally shoulder the costs.
“Hanssem covered the full costs for setting up those showrooms, and running them with dealers,” Hanssem said in a statement. “Thus, dealers should participate in promotional events, and Hanssem made various efforts to support dealers, but the FTC did not take this into account.”