FTC overturns preliminary rulings to raise fines on food franchise

SEJONG-- The Fair Trade Commission (FTC) overturned a preliminary decision on penalizing a franchise in a rare move to increase the amount of levied fines, an indication that the watchdog is serious about punishing unfair business practices.

Bon IF, a foods company, was fined 46 million won (US$41,108) and ordered to take corrective measures in an initial decision by the FTC in March. The franchise had been the first company to be penalized for hyping advertisement and misinforming its brand licensees by lying that its recipes and ingredients were patented.

In a final meeting on July 14 to finalize the punishment, the FTC concluded that the fines were excessively reduced and that the amount should be increased 30 percent to 60 million won, the sources said.

The preliminary meeting had taken into account self-corrective measures by Bon IF, including compensating the franchisees.

"The rate of fines reductions is adjusted depending on the degree of self-correction," an official at the commission said. "In this case, the rate of reduction was narrowed."

Kim Sang-jo, a long-time activist who advocated corporate reform, was appointed FTC chief last month, forecasting speedy actions on ingrained business practices that critics say benefit large conglomerates at the expense of small companies and street merchants. On Tuesday, Kim made it mandatory for all restaurant franchises to make public its profit margins on products sold to brand licensees to improve transparency.

Source: Yonhap News Agency

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