The Fair Trade Commission (FTC) said Wednesday it has imposed corrective orders and a fine of 256 million won ($188,000) on the Jeju Liquor Wholesalers Association for blocking competition by restricting liquor supply prices.
Jeju has 22 businesses holding comprehensive liquor wholesale licenses that allow distribution of liquor for household and entertainment establishments, and all of them are members of the association.
According to the FTC, the association created the "Transaction Normalization Council Enforcement Rules" in March 2018, which prevented other operators from taking over existing customers and restricted the prices at which soju, beer and other liquor could be supplied to retailers. The association required member wholesalers to comply with these rules.
The association emphasized through regular general meetings, board meetings and working-level meetings that members should not encroach on other operators' customers. It also created the "Liquor Trade Purification Committee Dispute Resolution Guidelines and Measures for Violations," which contained sanctions, and pressured members to comply with the rules, the FTC said.
The organization designated a "normal price" at which wholesalers would supply retailers, calculated by adding a 27.5% to 30.0% intermediate margin to the release price shipped by liquor manufacturers. It also required members to observe a so-called "survival price," which limited discount rates to "within 10% of the normal price" when no support such as loans was provided to retailers.
The FTC viewed these actions as business association conduct prohibited under the Fair Trade Act. "This action addresses unfair practices by an association that includes all comprehensive liquor wholesale operators in the Jeju region, and is expected to revitalize price competition in the supply of soju, beer and other liquor," an FTC official said.
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