SEJONG, Aug. 28 (Korea Bizwire) — The Fair Trade Commission (FTC) announced on Sunday that it will punish windproof and waterproof fabrics company Gore-Tex with a 3.673 billion won fine for its role in artificially keeping the prices of its fabrics high.
According to the FTC, from March 2009 until December 2012, the company crafted policies that put pressure on 29 outdoor clothing brands to withhold supplying products with Gore-Tex fabrics to major retailers.
The fabrics company apparently pursued these policies despite there being no clause in its supply contract with the clothing brands that guaranteed it the right to do so.
Once it had outlined its terms, it reportedly sent “undercover” employees to major retailers to verify if any outdoor clothing brands were selling products with its fabrics.
Companies that were discovered to have violated Gore-Tex’s non-contractual policies saw their contracts terminated. At least four clothing brands lost access to the trademarked material in this manner.
In its defense, Gore-Tex argued that its methods of keeping outdoor brands out of the major retailers was a means of ensuring the fabric’s status as a high quality product.
The FTC disagreed with the arguments on the strength of data showing that prices of Gore-Tex fabrics rose excessively and competition between outdoors clothing brands dropped.
Furthermore, when looking at data from 2010 through 2012, when Gore-Tex fabrics were sold through major retailers, sales figures were approximately half of what other channels of distribution had achieved.
In conclusion, the FTC stated that it could not confirm whether the effects that Gore-Tex argued in support of its policies actually materialized.
A spokesperson for the FTC stated that Gore-Tex’s policies had severely limited the inventory and products of outdoor clothing brands and had incurred “a heavy penalty on consumers due to exorbitant prices”.
Lina Jang (email@example.com)