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NOTIFICATION ON THE TYP

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NOTIFICATION ON THE TYP Powered By Docstoc
					NOTIFICATION ON THE TYPES OF AND CRITERIA FOR SPECIAL UNFAIR BUSINESS PRACTICES RELATING TO LARGE RETAIL STORE BUSINESS

Enacted by Economic Planning Board Notification No. 1985-3, Oct. 2, 1985 Amended by Economic Planning Board Notification No. 1989-3, April 19, 1989 Amended by Fair Trade Commission Notification No. 1992-2, June 18, 1992 Amended by Fair Trade Commission Notification No. 1997-14, April 7, 1997 Amended by Fair Trade Commission Notification No. 1998-5, May 12, 1998 Amended by Fair Trade Commission Notification No. 2001-9, July 6, 2001

We hereby designate and notify the types of and criteria for special unfair business practices relating to the large retail store business pursuant to Article 23 (2) of the Monopoly Regulation and Fair Trade Act and Article 36 (1) and (2) of its Enforcement Decree. July 6, 2001 Fair Trade Commission

Types of and Criteria for Special Unfair Business Practices Relating to Large Retail Store Business

Article 1

Purpose

The purpose of this Notification is to define the types of and criteria for unfair business practices which constitute unreasonably taking advantage of one's bargaining position in transacting with others under Article 23 (Prohibition on Unfair Business Practices) Paragraph (1) 4 of the Monopoly Regulation and Fair Trade Act (hereinafter, the "Act") and prohibited practice subject to the abusive behavior of dominant position pursuant to Paragraph 6 of Appendix 1(Types of and Criteria for General Unfair Business Practices) stipulated under Paragraph 1, Article 36(Designation of Unfair Business Practices) of the Enforcement Decree of the MRFTA.

Article 2

Definitions of Terms

For the purpose of this Notification (1) "Large retail store business" means a business retailing various kinds of products, which consumers use in their daily lives to general customers in the store whose total area(total area=floor area X 95/100) is 3000 square meter and more. (2) "Large retailer" means a person who engages in the large retail store business.

(3) "Supplier" means a person who supplies products to a large retailer, regardless of the type of transaction such as subcontract, direct purchase, specified purchase, etc. (4) "Store lessee" means a person who leases a part of a sales area from a large retailer and uses such area to sell products or services, and a person who sells his/her products (including a manufacturer's agent or special agent who sells the products of the manufacturer) and pays to the large retailer a certain percentage of his/her sales as a commission. (5) "Subcontract transaction" means manufacturing consignment in which a large retailer has a supplier supply products of specified size, design, form, etc., or sales of products bought by a large retailer from a supplier on the condition that trademarks as required by the large retailer are attached thereto. (6) "Direct purchase transaction" means large retailer directly purchases products from a supplier for sale. (7) "Specified purchase transaction" means large retailer sells products consigned by a supplier and returns the inventory. (8) <Deleted>

Article 3

Undue Return of Products

In subcontract transactions or direct purchase sales transactions, a large retailer shall not return, in part or in whole, products it has purchased from a supplier (including replacing a purchase agreement with a trust agreement, exchanging the supplied products with other products and other cases of actually returning products), except in the following cases. 1. Returning to the supplier products that are damaged, spoiled or defective due to reasons attributable to such supplier within a reasonable period from the date of delivery in accordance with the customary practices; 2. Returning the supplied products to the supplier concerned within a reasonable period from the date of delivery because the products delivered differ from the ordered products; 3. Returning the supplied products to the supplier concerned upon obtaining the consent of the supplier concerned, on the condition that he/she will bear the loss resulting from the return of the supplied products; or 4. Returning products to the supplier concerned because the supplier, believing that it is more advantageous to have the products returned and directly sell them, requests a large retailer to return the products. In this case, the large retailer shall not coerce the supplier to request the return.

Article 4

Undue Price Reduction

No large retailer shall reduce the payment amount for products after having purchased the products from a supplier, except in the following cases. 1. Reducing the payment amount of products to reasonable levels (within a reasonable period in light of customary practices from the date of delivery), when the products are damaged, spoiled or defective due to reasons attributable to the supplier; or 2. Reducing the payment amount of products to reasonable levels (within a reasonable period in light of customary practices from the date of delivery), when the supplied products differ from the ordered products.

Article 5

Undue Delay of Payment to the Supplier

When large retailer sells products consigned by a supplier, and manage the selling price of products from the store lessee, no large retailer may engage in activity of delaying the sales payment without any justifiable reason 1. <Deleted> 2. <Deleted>

Article 6

Undue Coercive Demands

No large retailer shall engage in one of the following activities vis-a-vis his/her supplier or a store lesser who engages in transaction with him/her: 1. <Deleted> 2. force a supplier to supply products at prices remarkably lower than the normal supply price in order to conduct special sales activities such as special discount sales, bargain sales, etc.; 3. force a supplier or a store lessee to participate in the special sales activities such as premium sales or special discount sales; 4. force a supplier or a store lessee to purchase products or gift vouchers.

Article 7

Undue Refusal to Receive

A large retailer shall not delay or refuse to receive, in part or in whole, products without a reason attributable to the supplier concerned, after having entered into an agreement providing for the size, design, form, etc. of the products for supply.

Article 8

Undue Coercion of Sales Promotion Costs and etc.

(1) A large retailer shall not perform any act which gives burden on a supplier to pay the costs for not directly contributing to promoting product sales. (2) If a large retailer gives a supplier or store lessee to pay for advertising costs, gift voucher costs, or sales promotion costs, such as part time cost, the amount concerned, way to get such calculation, and the usage shall be clearly defined beforehand. The cost concerned paid by a supplier or store lessee shall not exceed the scope of direct interests gained by a supplier or store lessee, such as sales promotion and cost reduction. (3) A large retailer shall not ask for a supplier to dispatch his/her employee to be engaged in sales activities, or to pay labor costs of employee of large retailer. Provided, when dispatching an employee on the supplier side, who has special ability and expertise in sales, gives more benefits to supplier, dispatch conditions, such as contents of work, working time and dispatch period shall be clearly defined.

Article 9 <Deleted>

Unfair Imputation of Advertising Fee

Article 10 Obstruction of Business Activities A large retailer shall not perform any act, which unduly obstructs transaction with other businessman by forcing exclusive transaction relationship or refining the relationship only with his or her own stores, which led to constrain self-disciplined judgment of supplier or store lessee. Article 11 Obligation to sign the written contract and undue changes of contract (1) A large retailer shall not perform one of the following acts in transacting with a supplier or store lessee. 1. Transact with a supplier or store lessee without written contract, or give the written contract after a store lessee opens a store. 2. Not include the lists on the written contract that can trigger conflicts regarding transaction, such as transaction method, transaction item and amount, transaction period, payment method, dispatch of employee, division of promotion costs (including, the size and location of store) (2) Except the case when a large retailer changes the location of stores to re-display the products based on the mutual contracts with supplier or store lessee, or there is any justifiable reason such as giving direct benefits to a supplier or store lessee, there shall be no change during the contract period.

ADDENDUM Article 1 Effective Date

This Notification shall take effect on the date of notification.

Article 2

Suppression

As of its Effective Date, this Notification shall supersede the "Notification on the Types of and Criteria for Special Unfair Business Practices Relating to the Department Store Business" (Fair Trade Commission Notification No. 92-2).

ADDENDUM (May 12, 1998) Article 1 Effective Date

This notification shall enter into force on the date of its notification.

Article 2

Suppression

As of its Effective Date, this Notification shall supersede the "Notification on the Types of and Criteria for Special Unfair Business Practices Relating to the Department Store Business" (Fair Trade Commission Notification No. 97-14).

Article 3

Interim Measures

Any acts performed before the Effective Date shall be governed by the prior Notification on the Types of and Criteria for Special Unfair Business Practices Relating to the Department Store Business" (Fair Trade Commission Notification No. 97-14). ADDENDUM (July 6, 2001) Article 1 Effective Date This notification shall enter into force on the date of its notification. Article 2 Interim Measures Any acts performed before the Effective Date shall be governed by the prior Notification on the Types of and Criteria for Special Unfair Business Practices Relating to the Department Store Business (Fair Trade Commission Notification No. 1998-5)


				
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