The Fair Trade Commission punishes Samsung Electronics for breaking agency law
Request for information about the sale of ‘trade secrets’ for approximately 6 years
The Fair Trade Commission decides that it is an act of interference in management activities.
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Samsung Electronics Seocho Headquarters, Seocho-gu, Seoul
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Samsung Electronics Seocho Headquarters, Seocho-gu, Seoul
Samsung Electronics was sanctioned by the Fair Trade Commission after requesting information on the amount of fridges, washing machines and air conditioners sold by home appliance dealers.
The Fair Trading Commission announced on the 10th that it would impose a remedial order on Samsung Electronics for breaching the Fair Dealer Transactions Act for unfairly interfering with the management activities of dealerships without reasonable grounds.
Samsung Electronics asked its dealers to enter the sales amount of home appliances such as refrigerators, washing machines and air conditioners over a period of 6 years and 9 months between January 2017 and September last year as a ‘required input’ in the computer system (DPS) operated by the main office. DPS is a system where dealers perform product ordering, delivery/installation requests, and inventory management. As of 2020, the total number of sales information acquired by Samsung Electronics from 159 vendors was 15,389 (based on product model), totaling KRW 748.6 billion.
Information about sales volume is a trade secret. Once the sales amount is known, the dealer’s margin (sales amount – supply amount) is exposed. If the head office knows the boundaries of its dealers, it is very likely that the head office will lead the negotiation of supply prices between the head office and the dealers.
When the Fair Trading Commission’s investigation began, Samsung Electronics stopped asking for information on sales volumes starting in October last year. Samsung Electronics explained, “We used the provided sales volume information as a standard for rating agencies and payment incentives.”
However, the Fair Trade Commission decided that the actions of Samsung Electronics amounted to ‘interference with business activities’ prohibited by the Agency Act and decided to impose sanctions. The Fair Trade Commission said, “This is a case where Samsung Electronics took advantage of its superior position in transactions to request information about product sales prices from sellers without a reasonable basis, which was judged to be an act of interference in business activities, and which detect and punish,” adding, “Head office’s unreasonable interference with dealers will continue in the future.” “We will continue to monitor and strictly enforce the law if the same illegal act happens again,” he said.
However, some point out that the sanctions are not effective as Samsung Electronics has already been collecting sales volume information from sellers for 6 years and 9 months.
Reporter Sejong Lee Young-jun
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