SEOUL, May 31 (Korea Bizwire) – Korea’s Fair Trade Commission (FTC) revealed Monday that it plans to repeal a policy that limits the value and the amount of marketing premiums.
For the past 35 years, marketing premiums were limited to 20 million won in value, and the combined value of all giveaways was not allowed to surpass 3 percent of expected sales.
In fact, Hankook Tire and Lotte World received correction orders from the FTC in March 2015 for offering giveaway vehicles valued at 35 million won and 25 million won respectively.
The FTC determined that improved consumer awareness and current advances that allow for the real-time comparison of products have lowered the chances of consumers making the wrong purchasing decisions based on marketing giveaways.
The commission expects the repeal to offer easier market entrance to new businesses and lowered product prices to consumers.
The repeal, however, still has limitations.
If premiums are used to deceive consumers with misinformation, or to eliminate business competitors, they are subject to FTC restrictions under the Fair Trade Act.
“If premiums are deemed to have been used to eliminate competition, they can be reported, and the company could be subject to an investigation and sanctions,” said an FTC official. “We have a specific standard in the Supreme Court precedent.”
Nonetheless, there are concerns that heightened competition may result in premium expenses being reflected in higher consumer prices.
The FTC plans to finalize the repeal process by June 20 after careful consideration of various expert opinions.
By Joseph Shin (email@example.com)