"The Whole Island in Collusion": Jeju Liquor Association's Exclusive Rules Exposed... "Retaliation for Discounted Sales" Price-Fixing Unveiled

Imposing 'Survival Price' by Controlling Member Discount Rates
Restricting Competition for Clients... Retaliatory Measures for Violations

The Jeju Liquor Distribution Association (Jeju Liquor Association), which has blocked competition among wholesalers and controlled prices in the distribution market for alcoholic beverages such as soju and beer in Jeju Island, is facing sanctions from the Fair Trade Commission. The association was found to have restricted competition for clients among its member businesses and enforced compliance with controlled sales prices.

On May 3, the Fair Trade Commission announced that it had decided to impose corrective orders and a total fine of 256 million won on the Jeju Liquor Association for engaging in prohibited collective conduct. This measure addresses the unfair practices of the organization, which includes all 22 licensed comprehensive liquor wholesalers in the Jeju region, and aims to rectify these actions.

In March 2018, the Jeju Liquor Association established the "Transaction Normalization Council Implementation Rules" to prohibit member businesses from encroaching on each other's existing clients. The implementation rules explicitly state, "Existing clients must not be encroached upon under any circumstances, and sales activities are permitted only for newly acquired clients."

Notably, in June 2023, the association detailed penalties for violations through its "Dispute Resolution Guidelines." If a member company was found to have taken another member’s client, retaliatory measures were imposed, such as opening the violator’s account to other members for a certain period so that clients could be taken back, thereby unfairly restricting the business activities of its members.

The price controls were also meticulous. The association set a "normal price" by adding a margin of 27.5% to 30% to the release price, and in cases where there was no support such as loans to retail stores, it limited the allowable discount rate to "within 10% of the normal price," effectively forcing adherence to what it called a "survival price."

Through board and working-level meetings, the association repeatedly emphasized the need to receive fair prices, claiming that "destroying the survival price leads to the industry’s mutual destruction." In January 2020, the board decided on a specific discount rate ceiling and enforced it, thereby artificially blocking reductions in the price of liquor supplied to retail stores.

Due to Jeju’s geographic characteristics, it is difficult for outside wholesalers to enter the market, and logistics costs such as shipping are high, so the 22 local wholesalers effectively divide up the market. The association exploited this closed market structure to control virtually every aspect of its members’ operations and to suppress competition.

The Fair Trade Commission imposed a fine of 22 million won for restricting competition in securing clients and 234 million won for restricting sales prices.

The Fair Trade Commission stated, "This action is expected to invigorate price competition for soju, beer, and other beverages enjoyed by Jeju locals and domestic travelers. We will continue to take strict action against unfair practices in product markets that affect the cost of living."

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