This article was published on March 18, 2025, at 1 p.m. on the ChosunBiz RM Report site.
The Fair Trade Commission has begun investigating the Korean Pharmaceutical Association amid controversy over the "Daiso health functional food (health supplement) sales interference," drawing attention to potential penalties. The key issue lies in whether the business group (Korean Pharmaceutical Association) engaged in actions that restricted the market activities of specific corporations, which could constitute a violation of the Fair Trade Act. In the past, the Fair Trade Commission also investigated similar cases involving the Korean Bar Association and the Korean Medical Association. However, the difference this time is that the focus is on whether there was coercion directed at specific corporations rather than at members.
◇ The key issue in the Fair Trade Commission investigation is 'coercion'
On the 18th, according to the industry, the Fair Trade Commission recently conducted an on-site investigation at the office of the Korean Pharmaceutical Association.
The Fair Trade Commission is investigating whether the actions of the Korean Pharmaceutical Association constitute prohibited acts under the Fair Trade Act. The core of the issue is whether the association directly coerced pharmaceutical companies that supply products to Daiso to suspend sales.
According to Article 51 of the Fair Trade Act, business groups may not unfairly restrict the business activities of members or specific business operators. Those who violate this can face corrective orders, penalty surcharges, and other sanctions.
The Fair Trade Commission is looking into whether the Korean Pharmaceutical Association requested or pressured pharmaceutical companies supplying to Daiso to withdraw. Daiso began selling health supplements at affordable prices ranging from 3,000 to 5,000 won, after inviting products from IL-YANG PHARM, Daewoong Pharmaceutical, and others. However, just four days after the launch, some products were withdrawn.
After Daiso's entry into the health supplement market, the Korean Pharmaceutical Association publicly criticized the pharmaceuticals, stating that supplying health supplements at prices lower than pharmacies is "deceptive to consumers." Subsequently, some pharmacists indicated they would take a strong stand by returning the over-the-counter drugs supplied by the pharmaceutical companies to Daiso.
The Fair Trade Commission reportedly will not investigate whether the Korean Pharmaceutical Association directly demanded action from individual pharmacists associated with pharmacies. Instead, it is looking into whether the association instructed pharmaceutical companies to withdraw from supplying Daiso. If the withdrawal of these companies was due to pressure from the association, there is a possibility of legal violations.
◇ What is different about the pressure from the pharmaceutical association compared to the bar association and medical association?
The way the Fair Trade Commission is investigating this case can be compared to past cases where it sanctioned the Korean Bar Association. In 2023, the Fair Trade Commission required lawyers to withdraw from the legal services platform "LawTalk," imposing a total of 2 billion won in corrective orders and penalty surcharges on the Korean Bar Association and the Seoul Bar Association for failing to comply.
At that time, the Fair Trade Commission determined that the Korean Bar Association's restriction on lawyers from using a specific platform constituted prohibited acts under the Fair Trade Act. However, in 2024, the court ruled that the imposition of penalty surcharges by the Fair Trade Commission was unjustified. The court viewed the act of a legal group controlling the legal platform as a legitimate act under the Lawyer's Act, and not subject to the Fair Trade Act. Consequently, the Fair Trade Commission has appealed, and the case is currently pending in the Supreme Court.
Additionally, last year, the Fair Trade Commission conducted an on-site investigation regarding the Korean Medical Association. The Ministry of Health and Welfare submitted a report to the Fair Trade Commission, claiming that the association coerced its members to suspend operations.
The Fair Trade Commission investigated whether the Korean Medical Association pressured its members to participate in the suspension, examining evidence that the association exerted pressure through official documents, messages, and social media.
However, the current case involving the Korean Pharmaceutical Association differs from those of the bar and medical associations. While the bar and medical associations are accused of coercing specific actions from their internal members (lawyers and doctors), the Korean Pharmaceutical Association is alleged to have exerted pressure on pharmaceutical companies to withdraw from the distribution network. The Fair Trade Commission is rigorously reviewing whether the involvement of the Korean Pharmaceutical Association was merely an expression of opinion or if there was substantial pressure.
Meanwhile, consumer groups criticize the Korean Pharmaceutical Association's opposition to Daiso's sale of health supplements as an infringement on consumer choice. The Korea Consumer Association issued a statement on the 7th, stating, "Health functional foods are not pharmaceuticals, so consumers have the right to freely purchase them from their desired distribution channels," adding that "blocking sales without justifiable reasons from specific distribution networks disrupts fair market order and infringes on consumer rights."