Forced to Work 200 Days Without Contracts and Delayed Payments... Lotte Shopping Fined 569 Million Won for Widespread Supplier Abuse

Written Contracts Delayed up to 201 Days for 97 Suppliers
Payments Made After Legal Deadlines, Late Interest Unpaid

Lotte Shopping, a retail giant, has been caught by the Fair Trade Commission for engaging in a wide range of unfair practices, or "gapjil," against its suppliers. These included delayed delivery of written contracts, late payment of goods, and unjust returns of merchandise. It was revealed that the company violated multiple provisions of the Act on Fair Transactions in Large Retail Business by paying suppliers after the legal deadline, often using excuses such as provisional seizure of claims, and failing to pay the required overdue interest.

Lotte Shopping Mart division was caught by the Fair Trade Commission for repeatedly abusing its power against suppliers. The photo shows a Lotte Mart. Photo by The Asia Business Daily DB.

On March 15, the Fair Trade Commission announced that it had decided to impose a corrective order and a fine of 569 million won on Lotte Shopping for these actions. However, the company received a warning for voluntarily rectifying the overdue interest payments during the investigation period.

The large-scale unfair practices were uncovered in the Mart division. From 2021 to 2024, Lotte Shopping entered into contracts with 97 suppliers but delayed issuing written contracts by up to 201 days instead of providing them immediately.

The unfair treatment continued with payments. Lotte Shopping paid 80 suppliers for goods later than the legally mandated deadlines—within 60 days for direct purchases and within 40 days for consignment transactions—delaying payments by anywhere from at least 1 day to as long as 386 days. Furthermore, the company failed to pay approximately 34.34 million won in overdue interest that accrued during this process. Lotte Shopping cited provisional seizure of claims as a reason for withholding payments, but the Fair Trade Commission pointed out that the company could have fulfilled its obligations by depositing the funds with the court within the deadline and thus had no valid excuse.

Lotte Shopping also returned goods in direct purchase transactions, where the retailer is supposed to bear all sales and inventory risks, without justifiable reasons. Over the past three years since 2021, the company returned 19,853 items—including infant formula and cosmetics—worth about 220 million won, to nine suppliers, shifting inventory burdens onto them without voluntary requests from the suppliers or objective supporting documentation.

Additionally, the company committed multiple violations of the Act on Fair Transactions in Large Retail Business by dispatching employees from suppliers and having them work on-site before signing written dispatch agreements, which is strictly prohibited.

The Fair Trade Commission stated, "This case is significant in that it helps prevent disadvantages to economically weaker suppliers and increases accountability for large retailers. We will continue to closely monitor and take strict action to eliminate improper practices in the retail industry."

This content was produced with the assistance of AI translation services.