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KFTC takes action against GM Korea for limiting online advertising activities of dealerships

  • DATE WRITTEN : 2022-06-13
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The Korea Fair Trade Commission (led by Chairperson Sungwook Joh, hereinafter referred to as the \"KFTC\") decided to impose corrective orders on GM Korea, a car manufacturer, for making dealerships that sell its cars perform online advertising activities only on a specific online channel by abusing its superior bargaining position.

This measure is significant in that the KFTC identified and corrected the supplier\'s act of unfairly restricting dealerships\' business activities in the automobile market. Moreover, it is expected that the implementation of this measure will contribute to improving consumer convenience and benefits by encouraging dealerships to compete for customers with various promotional activities.

From April 1, 2016 to the present, GM Korea made dealerships that sell its cars on consignment to advertise only on Facebook. According to the \"Chevrolet Dealership Social Media Activity Guidelines\" distributed by GM Korea, advertising on online media channels other than Facebook are not allowed, and this is an act of limiting online advertising activities, which are promotional activities that fall under the domain of dealerships\' business activities.

In addition, GM Korea laid down strict rules regarding online advertising activities. Specifically, penalty points were imposed on dealerships that violated the above guidelines for online advertising activities, and dealerships were also required to submit a letter of confirmation that they will comply with the social media guidelines.

GM Korea unilaterally determined dealerships\' promotional activities and demanded dealerships to implement them. This is an act of a supplier unfairly interfering with a dealership\\\'s business activity, which is prohibited under the Monopoly Regulation and Fair Trade Act (hereinafter the \"MRFTA\") and the Fair Agency Transactions Act (hereinafter the \"Agency Act\").

In accordance with Article 2 of the Addenda to the Agency Act, the MRFTA is applied to practices carried out up until December 22, 2016, before the Agency Act went into effect, and the Agency Act is applied to practices carried out from December 23, 2016, after the Agency Act came into force.

The KFTC ordered GM Korea to discontinue the act and to stop the same or similar acts from happening again in the future. In addition, the KFTC ordered GM Korea to notify all dealerships of the fact of receiving corrective orders from the KFTC.

Reasons for not imposing a penalty surcharge
The KFTC considered the fact that the respondent\'s violation of the law cannot be regarded as having malicious intent or purpose since the respondent had consultation with the Dealership Development Council, and it also considered the fact that the respondent has obtained no unfair benefits by restricting online advertising activities.

This measure is meaningful in that the KFTC stopped the supplier from abusing its superior bargaining position to limit dealerships\' online advertising activities to a specific media channel for a long time, which is against the law since it is an act of limiting promotional activities that fall under the domain of dealerships\' business activities.

Moreover, it is expected that the KTFC\'s measure will contribute to improving consumer welfare by encouraging free competition among dealerships through various promotional activities in the passenger car market, which is closely related to people\'s daily lives.

The KFTC plans to continuously monitor suppliers\' unfair interferences with business activities in order to guarantee autonomy for dealerships and agencies. Also, the KFTC will take strict measures against violations that
infringe on their rights and interests in the future.

      
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