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Supermarket giants face probe over unfair practices

Korea’s top three supermarket chains are under investigation by the nation’s antitrust watchdog over allegations that they purposely misled consumers or forced suppliers to share their losses.

The Fair Trade Commission on Wednesday launched investigations into E-mart and Lotte Mart, the nation’s top two supermarket chains, to determine whether they violated laws governing advertisements.

“We are looking into corporate documents to see whether the two chain stores deceived consumers in product pricing linked to marketing promotion events,’’ an FTC official said.

One such case being investigated is that the chain stores advertised the bargain prices of products for a set period of time but did not change the prices afterward.

Last week, the FTC separately launched an investigation into the nation’s third-largest supermarket chain Homeplus, based on complaints that the retailer used its superior position to pressure suppliers into taking smaller profit margins for products sold at its stores.

The Korean unit of the British retail giant Tesco slashed the prices of 500 nonprocessed food items in March, which resulted in a 22 percent boost in monthly sales.

Homeplus was also alleged to have forced its suppliers to bear the costs required to prepare for various promotion events.

Homeplus argued that the company accepted cuts from its own margin, and that it did not treat its suppliers unfairly. The retailer said it was explaining the details to the FTC.

Lawmakers have urged FTC chairman Jeong Jae-chan to thoroughly investigate large discount stores for slashing prices of goods and passing on the cost to suppliers.

“As the economic slowdown continues, discount stores’ price and business policies, which are closely connected to consumers lives, are receiving growing attention,” an official at a supermarket chain said.

Based on the investigation results, the FTC could issue a correction order, slap fines or file criminal charges against the three retail chains.

By Park Han-na hnpark@heraldcorp.com)
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