Food company Dongwon F&B received a corrective order from the Fair Trade Commission on suspicion of violating the Act on Fair Transactions in Large Franchise and Retail Business.
According to the Korea Fair Trade Commission (FTC) on the 22nd, Dongwon F&B supplied its dairy products and dumplings to dealerships and signed equipment rental contracts with them for refrigerators, freezers, and the like. It lent refrigeration equipment to the dealerships, but the problem was that if the equipment broke due to the dealerships' fault, the contract required them to compensate the full purchase price of the equipment without depreciating it for the period of use. The price of each refrigerator or freezer that Dongwon F&B lent was reportedly up to 3 million won per unit.
Also, when a dealership purchased refrigeration or freezing equipment separately, Dongwon F&B partially subsidized the cost in return for attaching branded advertisements to the equipment. In that case as well, the contract required the dealership to return the entire advertising cost without regard to the period of equipment use if the advertisement was lost due to the dealership's fault or if damaged advertisements were not repaired.
The Korea Fair Trade Commission (FTC) determined that Dongwon F&B unfairly used its superior bargaining position in the transaction to disadvantage the dealerships. Article 9 of the Agency Transactions Act prohibits suppliers like Dongwon F&B from using their position to set unfavorable transaction terms for dealerships. However, considering that there were no cases where a dealership actually compensated Dongwon F&B the full equipment price, the Korea Fair Trade Commission (FTC) imposed only a corrective order.