FTC Sanctions Nature’s Farm for Forcing Fixed Prices on Health Supplements

The South Korean Fair Trade Commission (FTC) has issued a corrective order against Nature’s Pharm, a health supplement manufacturer, for illegally controlling the retail prices of its products sold through pharmacies.

According to reports from SBS News and v.daum.net, the regulator found that Nature’s Pharm pressured pharmacies to maintain specific price points and threatened to terminate business relationships with those that sold health functional foods at discounted rates.

Eight Years of Price Control

Reporting from Asia Economy indicates that Nature’s Pharm engaged in these price-control practices for a period of eight years. The company, which manufactures the MyVitamin brand, sought to prevent pharmacies from offering discounts to consumers, thereby artificially maintaining high retail prices in the market.

Money Today reported that the manufacturer enforced a system where pharmacies were required to adhere to a fixed price. Pharmacies that deviated from these pricing guidelines faced various disadvantages, including the risk of losing their supply of the company’s products.

Surveillance and Social Pressure Tactics

The FTC investigation revealed that Nature’s Pharm utilized specific monitoring techniques to identify pharmacies that were discounting its products. Asia Economy reported that the company used barcode tracking to monitor retail prices and pinpoint which pharmacies were selling supplements below the mandated price.

Beyond technical tracking, the company used digital communication platforms to enforce compliance. No Cut News and Asia Economy reported that Nature’s Pharm operated KakaoTalk group chats where it pressured pharmacists to adhere to fixed-price sales.

Asia Economy described the nature of these group chats as a form of public execution, where pharmacies that offered discounts were exposed and shamed in front of other pharmacists to coerce them back into price compliance.

Regulatory Action and Market Impact

The Fair Trade Commission’s corrective order serves as a sanction against the company’s interference with the autonomous pricing rights of retailers. By forcing a fixed-price structure, Nature’s Pharm restricted competition among pharmacies and limited the ability of consumers to access health supplements at lower market prices.

The case highlights the regulator’s focus on preventing manufacturers from using their market position to dictate downstream retail pricing, particularly in the health functional food sector where pharmacy distribution is a primary channel.