The Korea Fair Trade Commission (KFTC) fined Carrefour’s South Korean unit 1.39 billion won (US$1.5mn) for unfair business practices. In a statement issued today KFTC says that Carrefour Korea unfairly saved 1.74 billion won (US$1.9mn) on supply orders in 2005 by forcing its suppliers to agree to pacts that allowed Carrefour to purchase goods at heavy discounts for extended periods.

“This move is aimed at rectifying unfair activities by large wholesale and retail operators toward their suppliers”, Associated Press (AP) quoted the KFTC statement. Carrefour is also ordered to cease other wrongdoing, including making unreasonable refund demands on unsold made-to-order inventory and delaying the signing of contracts with suppliers despite continuing to receive shipments.

According to Carrefour Korea’s spokesman Jason Kim, the supply of some goods at discount has become common practice at some discount stores, “so it’s unfortunate that the KFTC only targetted Carrefour”, Kim said to AP. “However, we respect the KFTC decision and pay the fine. Still he said that Carrefour will review how the KFTC calculated the unpaid trade bill as some of the discount purchases “were made under an appropriate mutual agreement” between Carrefour and its suppliers.

The fine from the KFTC comes at a time when Carrefour is selling its Korean operations because it lacked leverage to sustainably build a business. Last April Carrefour announced to sell its 32 stores to the local garment retailer E. Land Group.