The Fair Trade Commission imposes a penalty for unfair support activities in Lotte Chilsung
Supplying low-cost wines to subsidiary MJA Wines and paying promotional expenses
was found to have provided unfair support such as supplying wine to subsidiary MJA Wines at low prices and paying promotion fees, and the Fair Trade Commission imposed a fine and decided to sue the prosecution. No relation between photo and article/Photo = Hankyung DB
Lotte Chilsung(138,500 +1.09%)The Fair Trade Commission decided to impose a fine and file a complaint with the prosecution after it was discovered that beverages provided products to subsidiary MJA Wines at low prices and paid promotional expenses.
The Fair Trade Commission announced on the 6th that it would impose a correction order and a total of 1,185 million won for unfair support for MJA wine, a subsidiary of Lotte Chilsung. In addition, the FTC decided to sue Lotte Chilsung to the prosecution.
Lotte Chilsung supplied its own wine at a low price by applying a high discount rate to MJA wine, which sells wine at department stores. In addition, it paid the service cost of sales promotion staff and put its own manpower into the MJA wine business. The FTC estimates that Lotte Chilsung has provided a total profit of 3.5 billion won to MJA Wines from 2009 through such support activities.
Accordingly, the Fair Trade Commission imposed a fine of 770 million won on Lotte Chilsung and 478 million won on MJA Wine.
According to the Fair Trade Commission, MJA Wines fell into complete capital erosion in 2009, and financial status was sluggish in 2013 as well. Lotte Chilsung provided the competitive conditions for MJA wines in an advantage over other rivals to support them. As a result, the cost ratio of MJA wines fell from 77.7% in 2012 to 66% in 2019. Gross profit (sales-cost of sales) also improved from 1,123 million won over the same period to 5,097 billion won in 2019. As a result, it has been able to maintain its position as the second-largest business owner in the wine retail market of department stores without being removed from the market.
Source = Provided by the Fair Trade Commission
MJA Wine made an operating profit in 2016. The following year, in 2017, Lotte Chilsung, a Lotte Holdings with a high total family ownership.(33,400 -0.89%)Sold MJA Wine to Lotte Holdings resells MJA wines to Lotte Chilsung last year, which was under investigation by the FTC, and the company is now returning as a subsidiary of Lotte Chilsung.
An official from the FTC said, “We investigated how the incident occurred and the internal order process, but the circumstances in which the total family intervened did not come out.” The decision came out to accuse only,” he said.
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