Seoul: The antitrust watchdog said Wednesday it has imposed a fine of 22.9 billion won (US$16.3 million) on the operator of coffee chain Mega MGC Coffee for unfairly shifting mobile gift certificate fees onto franchisees without prior consent. The penalty marks the largest fine ever levied in the food service sector under the country’s Fair Transactions in Franchise Business Act, according to the Fair Trade Commission (FTC).

According to Yonhap News Agency, AnnHouse Corp., the operator of Mega MGC Coffee, is accused of forcing franchisees to bear the full 11 percent commission fee on mobile gift certificate sales between August 2016 and July 2020, the FTC said. “This is a new type of unfair practice in which mobile gift certificate fees were unilaterally passed onto franchisees without consent or prior negotiation,” said Park Jin-seok, a senior FTC official.

The company also allegedly forced franchisees to purchase specific essential items, such as ice makers and coffee grinders, exclusively from company-approved suppliers at prices higher than market rates, the FTC said. Following the announcement, the company said it humbly accepts the FTC’s decision and will work to strengthen its partnership with franchisees through clear processes.