CJ Olive Young, which faces allegations of forcing suppliers into exclusive product deliveries by the Fair Trade Commission (FTC), may be subject to fines exceeding 500 billion won according to recent media reports.
On Oct. 4, a domestic news outlet reported that the FTC, which has been investigating Olive Young since May of last year, has concluded that it abused its dominant position.
Olive Young presented contracts to specific partner companies with a clause stating that they cannot supply products to other distribution channels, and those who did not comply were expelled. Additionally, there are allegations that the company obtained products at discounted prices for promotional events and then sold them at regular prices after the promotion ended, thereby profiting further.
Accordingly, the scale of fines for these wrongful acts could amount to up to 6 percent of CJ Olive Young’s cumulative revenue from 2014 to the present, approximately 12 trillion won, if determined through a full commission session at the FTC within this year. In such a scenario, the industry estimates that the fines could range from 580 billion won (US$427.73 million) to a maximum of 720 billion won.
However, these figures are estimates, and the final amount will depend on how CJ Olive Young’s market dominance in both the online and offline sectors is ultimately defined.
As of the end of last year, CJ Group’s ownership stake in CJ Olive Young stands at 51.15 percent. As of 9:46 a.m. on Oct. 4, CJ was trading at 78,600 won, down 12.47 percent, or 11,200 won, compared to the previous trading day, according to Marketpoint. After hitting a 52-week low of 60,300 won in July, it rebounded and reached the 90,000 won range. However, within just a month, it fell back to the 70,000 won range once again.
The FTC plans to convene a full commission session as early as this month to determine the amount of fines and whether or not to file a report with the prosecution.