Nonghyup Hanaro Distribution was sanctioned by the Fair Trade Commission for receiving "new product entry incentive fees" even on products that had been on the market for as long as 8 years and 9 months.
On the 9th, the Korea Fair Trade Commission announced that it issued a corrective order and imposed an administrative fine of 462 million won against Nonghyup Hanaro Distribution for violating the Large-Scale Retail Store Act.
According to the Korea Fair Trade Commission, in January 2021, Nonghyup Hanaro Distribution revised its "Sales Incentive Fee and Entrusted Business Fee Processing Manual" (hereinafter referred to as the Manual). At that time, it redefined the criteria for a "new product" not by the actual market launch date but by when the product was newly listed at its own store, Hanaro Mart. For six months after listing, the company collected an amount equivalent to 10% of the delivery value as a new product entry incentive fee.
As a result, from February 1, 2021, to November 1, 2021, Nonghyup Hanaro Distribution received a total of 303 million won in new product entry incentive fees from 43 suppliers for 187 products that could not be considered new. The targeted products were those that had been on the market for more than six months and no longer qualified as new. Among them was a product that had already been on the market for 8 years and 9 months.
The Large-Scale Retail Store Act allows retailers to receive sales incentive fees from suppliers but stipulates that such fees must not exceed a reasonable range. Accordingly, the Korea Fair Trade Commission's "Guidelines for Assessing the Unreasonableness of Sales Incentive Fees" set as a principle that new product entry incentive fees should apply only to products launched within six months after their market release. In practice, other major department stores and convenience stores in the retail industry also classify products launched within six months as new products.
Additionally, between January 2021 and July 2024, Nonghyup Hanaro Distribution signed 863 delivery and listing contracts with 426 suppliers and listing partners but delayed providing written contracts—signed or stamped by both parties—with clearly specified terms on transaction type, items, duration, etc., by an average of 30 days.
Furthermore, from April 2021 to January 2024, the company received a total of 43 promotional staff members dispatched by 10 suppliers across 11 occasions to work at Hanaro Mart without having previously agreed in writing on the dispatch conditions.
A Korea Fair Trade Commission official stated, "We will continue to intensively monitor practices that have become habitual and entrenched in the retail market. We will detect and take action against violations by large-scale retailers to protect the rights and interests of suppliers and listing partners."
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