Lotte Shopping will face sanctions from the Fair Trade Commission for alleged violations of the Act on Fair Transactions in Large Franchise and Retail Business.

The FTC said on March 15 it decided to fine Lotte Shopping 569 million won after finding the company violated the law by failing to immediately provide written contracts when dealing with businesses supplying Lotte Mart. The FTC also plans to issue corrective orders and a warning to Lotte Shopping.

According to the FTC, from Jan. 13, 2021 to Feb. 23, 2024, Lotte Shopping did not immediately provide signed or sealed contracts stating transaction type, items and period while concluding 101 contracts with 97 suppliers and others. The delay in providing contracts ranged from at least 1 day to as long as 201 days.

The FTC also found Lotte Shopping paid suppliers after receiving goods, exceeding the statutory payment deadline by at least 1 day and up to 386 days. It said the company also did not pay about 34 million won in late interest incurred in the process.

The FTC said it also found legal violations in the process of returning 19,853 items purchased through direct purchases at the request of suppliers. The value of the returns was about 220 million won.

Under the law, large retailers cannot return delivered goods without justifiable grounds. In direct purchase transactions, returns are exceptionally permitted only when the supplier submits written, objective evidence that the return provides a direct benefit to the supplier. The FTC said Lotte Shopping proceeded with returns without such documents being submitted.

The FTC also found Lotte Shopping had employees dispatched from 6 suppliers for 1 to 60 days to work at Lotte Mart before signing employee dispatch agreements. The FTC judged this to be illegal as well.

Lotte Department Store and Lotte Mart are business divisions within Lotte Shopping, not separate legal entities. The FTC said it reviewed unlawful acts that occurred in the Lotte Mart business division in this case.