I was asked to sell only a specific product on the condition of advertising cost support; does this constitute a fair trade violation?

Hello. We provide legal consultation regarding fair trade violations.

The supplier's act of inducing the sale of only a specific product on the condition of advertising cost support may, depending on the circumstances, be judged to be an unfair customer-inducement act or a support act aimed at excluding competing businesses, so there is room for a fair trade violation.

The Fair Trade Act prohibits, as an unfair trade practice, a supplier's use of its transactional position to unfairly set trade terms for a distributor or to induce the distributor to handle only a specific product.

In particular, where financial support functions as consideration for the trade terms, it may be regarded as 'conditional support' and be judged unlawful.

In addition, from the distributor's standpoint as well, it may be subject to an investigation by the Fair Trade Commission, and if a fair trade violation is recognized, it may even lead to a corrective order, the imposition of a penalty surcharge, and, in serious cases, a criminal accusation.

In actual cases, if there are circumstances indicating that advertising costs or incentives were used as a means of 'blocking the sale of competing products,' the Fair Trade Commission seeks to prove the violation on the basis of electronic contracts, messenger records, emails, and the like.

Therefore, rather than simply complying with the supplier's request, it is necessary to organize, with objective materials, whether the trade terms are voluntary and whether they serve a legitimate commercial purpose.

In preparation for a future investigation, we recommend that you also secure the contract, records of the settlement of advertising costs, and sales guidelines.

Because the determination of the 'unfairness' of the conduct is important in a fair trade violation, whether legal liability arises varies depending on the circumstances before and after the transaction and its purpose.

If you have doubts, it is advisable to consult an attorney specializing in fair trade at an early stage to establish a response strategy.