Seoul fines Philips for ignoring EU FTA
By Sébastien Falletti in Seoul | Monday 25 June 2012
South Korea’s anti-trust authorities imposed a fine of US$1.3 million on the European electronics giant Philips, on 24 June, for blocking price cuts following the entry into force of the EU-South Korea free trade agreement (FTA). This is the first time that the Seoul-based Fair Trade Commission (FTC) fines a European firm for breaching the provisions of the bilateral free trade deal. The EU Delegation in Seoul declined to comment when contacted by
The Korean anti-trust watchdog accuses Philips of “price fixing”. “The company’s price policy does not allow consumers to buy products at cheaper price and retailers to compete in a fair manner,” said a representative of the FTC. The investigation found that the European firm prevented online shopping retailers from offering discount prices, ignoring the elimination of 8% entry duties on small electronic goods implemented since the FTA’s entry into force last July. The Korean branch of Philips set prices of goods for local shopping websites and banned them from selling goods at prices lower than those recommended between March 2011 and May 2012, said the FTC. Philips is the market leader in South Korea for small household appliances, such as electronic shavers, electronic toothbrushes, irons and coffee makers.
The FTC decision comes amid growing disillusionment among Korean consumers regarding the impact of the EU FTA. The government’s promises that the FTA will lead to tangible benefits for consumers are falling short of expectations as several importers and retailers fail to reflect the reduction or elimination of tariffs on their retail prices. Just ahead of the presidential elections, scheduled for December, the authorities are keen to show to the public that they are stepping up efforts against importers that do not play by the FTA rules.