The Fair Trade Commission plans to tighten its investigation of the country’s 56 largest companies to see whether they have engaged in anticompetitive practices, officials said Friday.
The decision was made based on reports and tips the watchdog received on the conglomerates’ ongoing irregularities, such as forcing price cuts and signing unfair deals, they added.
Subject to the government’s mutual growth index, the 56 businesses have vowed to step up their commitment to so-called fair trade and shared profit until April.
“We’ve been getting tips that some major firms, which already signed a mutual growth agreement, appear to be complying with the government’s guideline through outward ‘consultation’ and ‘consent,’ while forcing unfair deals in reality,” an FTC official said.
“The FTC will provide bold incentives for groups that follow the rule in earnest to settle down the mutual growth agreements, but will impose tough penalties on those that ‘only seem to be keeping their promises.’”
Major companies have come under fire for squeezing small- and medium-sized partners in order to pass the savings on to consumers and secure their dominance in the market.
A probe has been launched after suspicions that Hyundai Motor Co. and its affiliates Kia Motors Corp. and Hyundai Mobis Co. have abused their market power by forcing suppliers to cut parts prices. They have about 2,000 subcontractors collectively.
“FTC investigators visited their headquarters in southern Seoul and secured related documents,” FTC officials said early this week.
The news sparked criticism as the Korea’s top two automakers came forward to ink the cooperation deal, dubbed “the leader in mutual growth policy.”
Hyundai and Kia rejected the claim, saying price cuts, if any, would be part of efforts to cut production costs in the negotiating processes with their partners.
Since April, the FTC has also been looking into alleged wrongful practices that local major retailers including Lotte, Hyundai and Shinsegae have imposed commission fees far above the industry norm on smaller partners.
The antitrust body plans to launch a probe targeting about 60,000 local manufacturers over potential irregularities.
By Shin Hyon-hee (firstname.lastname@example.org