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Fair Trade

Seeking the common interests of stakeholders and social
responsibility through proper thinking and behaviors

You can check the frequently asked questions and answers in order to understand LOTTE DFS’s fair trade practices.

Total 18

  • Q

    Disturbance of Business Activities

    Large-scale retailers should not force suppliers to engage in exclusive business trade in an unfair manner or disturb the suppliers in their business with others.
    <For reference - business disturbance factors>
    1. Large-scale retailers use their superior power in business trade.
    2. Large-scale retailers force their suppliers or lessees to only make business relationships with their own company or branch stores.
    3. Large-scale retailers disturb suppliers or lessees in their business with others by limiting their voluntary decisions.
  • Q

    Terms in relation to representations and advertisements

    - Old Price: Until recently, the lowest price among the actual prices for which goods were the same as those for the year was actually sold for a while (for the past 20 days).
    - Discount Sales (price discount): an act of selling goods at a lower price for a certain period of time → The price will be returned to normal after the period.
    - Price Reduction: an act of reducing the price from a certain point, not for a certain period of time → should not be confused with special discount sales
    - Limited Sales: an act of selling special offer products or regular products in a limited quantity or price → The concerned items and quantity should be clearly marked.
    - Bargain Sale: an act of selling goods laid in stock or inferior quality goods whose selling period has passed at discount outlets or temporary special stores
  • Q

    Types of Unfair Representations and Advertisements

    - False and Exaggerated Advertisements: an act of representing and advertising differently from fact or overselling
    - Deceptive Representations/Advertisements: an act of representing and advertising in a way that conceals or reduces facts
    - Representations/Advertisements with Unfair Comparison: an act of representing and advertising by comparing with others without clarifying the comparison targets and standards or objective grounds in order to claim one’s superiority or benefits
    - Slanderous Representations/Advertisements: an act of representing and advertising other companies or goods with groundless reasons or unfavorable facts only.
  • Q

    Meaning of Representations and Advertisements

    - Representations: letters or figures attached or marked on goods, packages or a signboard at a work station to allow customers to know the information or condition of products or services offered by a company or its competitive business
    Ex.) POP, Show Card, etc.
    - Advertisements: a company’s act of promoting or presenting information on the business trade made by itself or its competitive company or conditions of goods or services offered by the company or its competitive business through the media
    Ex.) newspaper, flyers, DM, broadcasting, posters, etc.
  • Q

    Types of Notification on Offering Gifts

    Consumer gifts are those offered as accompaniments by trade. However, they were no longer available as of July, 2009.
    Currently, consumer promotion gifts are available, and they are gifts offered as accompaniments by trade in a form of reward.
    The limit of consumer promotion gifts should be 20 million KRW per item and should not exceed 3% of its expected sales.
    However, it is acceptable to exceed 3% when the total amount of promotion items is less than 30 million KRW.
  • Q

    What is the Notification on Offering Gifts?

    Accompanied by an act of purchasing an item or service of a company or others one is having a business relationship with.
    ① Accompanied by trade
    ② Offered to ordinary consumers
    ③ Economical profits
    - Goods, money and valuables, discount voucher, other marketable securities
    - Tickets for entertainment, movie, sports game / other benefits
    - Economic gains recognized as a means to attract other consumers
  • Q

    Prevention of Disadvantageous Acts

    Large-scale retailers should not give any disadvantage to their suppliers for reporting or notifying their law-breaking acts to the concerned authority such as an act of aversely modifying contract conditions or limiting opportunities for supplying goods and store rental.
  • Q

    Prevention of Economic Benefits / Other Forced Acts

    Large-scale retailers should not force suppliers to offer money, valuables, goods, service, and other economic gains to themselves or other third parties without any reasonable reason.
  • Q

    Prevention of Demand of Management Information

    Large-scale retailers should not request suppliers to unreasonably offer information.
    <For reference – information on management that should not be forced to be offered>
    1. Information on the supply condition of goods, requirement for store business launch, or merchandise cost
    2. Information on sales or promotional events of other retailers
    3. ID and password of other retailers on EDI
  • Q

    Background of Large-Scale Retailers’ Fair Trade Practices Act

    As monopolistic and oligopolistic practices are getting worse in the retail business while the power of large-scale retailers are becoming stronger, the need to protect suppliers from suffering from the unfair business trade is on the rise. Accordingly, clear standards on the supplying business were established and types of unfair trade act were specified/clarified in order to prevent them (as of January 1, 2012).
  • Q

    Prevention of Utilization of a Supplier’s Employees

    Large-scale retailers should not be offered employees or other workforce to utilize in their work site.
    However, this excludes cases wherein the large-scale retailers make a written contract with the suppliers in advance and get the employees to work in the sales or management of the goods delivered by the concerned suppliers.
  • Q

    Prevention of Sales Promotion Cost Transfer

    Large-scale retailers should not transfer expenses used in the preparation of sales promotion events to suppliers and others without making a prior agreement. In addition, the sales promotion cost paid by suppliers should not exceed 50% of the total amount even if a prior agreement was made.
  • Q

    Prevention of Reduction of Product Cost / Rejection and Delay of Receipt of Goods / Return

    Large-scale retailers should not cut down the cost of the delivered products or refuse or delay to receive the concerned goods in part or as a whole after concluding a contract with suppliers.
    In particular, large-scale retailers should not return the delivered goods in part or in full without a reasonable reason.

    However, exceptions can be made when the delivered goods are different than from the agreement or damaged by reasons attributable to the suppliers.
  • Q

    Obligation of Keeping Written Records

    Large-scale retailers should keep the documents in relation to a variety of agreement documents for five years of the expiration of the contracts.
  • Q

    Period for Payment of Product Sales Money

    Large-scale retailers should pay the money by selling goods through special sales and purchase contracts, consignment transactions, and lease to suppliers within 40 days after the monthly sales closure.
    (For the delayed payment after the period is prescribed, interests by the rate announced by the Fair Trade Commission should be additionally paid.)
  • Q

    Presumption of Agreement

    If retailers fail to reply to the contract signed by the suppliers within 15 days after the receipt of the agreement, the contract is presumed to be concluded as written in the document.
  • Q

    Making Written Contract Mandatory

    Large-scale retailers should immediately deliver the written document specifying major terms and conditions to suppliers after the conclusion of the contract.
    (Type of trade, items of trade, period of trade, means and schedule of delivery, means and time of payment for the delivered goods, etc.)
  • Q

    Business (large-scale retailers) to which the Large-Scale Retailers’ Fair Trade Practices Act is applied

    Among companies whose sales of the last business year are over KRW 100 billon or that operate a store larger than 3,000 m2, those that are given goods from multiple suppliers will be subject to Fair Trade Practices Act.
    1) Businesses who only run wholesale trade are excluded (for businesses who engage in both retail and wholesale trade, the sales and land scale of the retail trade will be considered).
    2) For convenience stores, the total sales of the stores directly managed by the headquarters and sales of the franchises combined will be taken in consideration.
    *Major companies subject to the Fair Trade Practices Act include department stores, large-scale supermarkets, SSM, home TV shopping, convenience stores, large-scale book stores, electronic shops, Internet shopping malls (open markets excluded) and more.