GS Retail, penalties for Lalavla suppliers, KRW 1.58 billion

Input 2020.11.22 12:00

The Fair Trade Commission imposed a fine of 1,058 million won along with a corrective order on GS Retail, which operated its own drugstore (health and beauty shop) Lalavla, forcing suppliers to return unfairly and reducing the cost of goods.

The Fair Trade Commission announced on the 22nd that it was imposing a total penalty of 1.058 million won along with a corrective order to GS Retail for violating the Large-scale Distribution Business Act. This is the second case in which the The FTC sanctioned health and beauty stores in the new retail sector after CJ Olive Networks (penalized about 1 billion won), which runs Olive Young last year.

Following the FTC survey, GS Retail was able to deal with a number of suppliers from January 2016 to June 2017. ▲Contract not issued before commencement ▲Product price reduction ▲Improper Return ▲It violated the law, such as the transfer of promotional expenses and sales incentives without a contract.

Since GS Retail merged with Watsons Korea, which operated Lalavla in June 2017, the Fair Trade Commission has considered Watsons Korea’s violation of the law to be an act of GS Retail.

According to the FTC, GS Retail (Watsons Korea) deducts approximately 530 million won from the price of the product and pays the cost of the “ 2015/2016 Health and Beauty Awards Ceremony ” event or buys it directly from multiple suppliers. She was forced to return products worth approximately 9.8 billion won for no justifiable reason.

The Fair Trade Commission plans to strengthen the misconduct monitoring activities of large distributors in the future.