The Fair Trade Commission said Monday that it will file a complaint against Namyang Dairy Products with the prosecution for bullying sales agents and retailers.
In addition, the nation’s largest dairy product maker was slapped with a 12.3 billion won ($10.6 million) fine by the antitrust regulator as an administrative sanction.
Namyang Dairy was found to have abused the headquarters’ power during some of its deals with 1,849 sales agents nationwide between 2007 and May 2013, according to the FTC.
The company pressured the small and mid-sized distributors to take on sales of unpopular or newly launched products regardless of their product orders.
“Sales agents had to shoulder the burden of inventory due to the company’s forcible stance,” an FTC official said. “As its headquarters frequently rejected returned goods, some agents had to throw away the products whose expiry dates passed, with no compensation.”
Further, the sales agents had to bear the burden of some part of the payment to non-regular employees in charge of sales promotion at large discount chains.
In 2012, the agents paid 59 to 67 percent -- collectively 3.4 billion won -- of the wages for the PR manpower while the company paid 33 to 41 percent.
Over the past few weeks, the FTC carried out a full-fledged probe into the company after an audio clip revealing a Namyang employee’s verbal abuse against a retailer ignited nationwide controversy over abusive business practices.
In the audio clip conversation between the Namyang official and the retailer, the former in his 30s shouted and berated the latter in his 50s, threatening him in order to have him buy more products.
Its eruption on the Internet not only drove Namyang’s share prices to spiral downward, but also damaged its credibility of being a socially responsible company.
Despite the company’s apology posted on its website, the public was not satisfied, claiming it lacked sincerity.
Meanwhile, Namyang Dairy was formerly subject to punitive measures for engaging in a cartel. Last year, a high court ruled in favor of a decision by the antitrust regulator to fine Namyang Products 2.3 billion won for price-fixing.
The court said the FTC’s imposition of fines on Namyang Dairy Products for fixing prices on their cheese products, along with other daily firms, was the right decision.
The ruling came as Namyang Dairy Products filed a nullification suit against the FTC over the fine and corrective orders issued on its business practices.
Internet users recently directed their rage toward the dairy company by resorting to social media to urge consumers to join hands in penalizing what they called greedy enterprises.
