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Namyang Dairy fined for unfair sales tactics

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(Globalpost/GlobalPost)

SEOUL, Jan. 24 (Yonhap) -- A Seoul court on Friday levied a fine of 120 million won (US$112,000) on a leading diary product maker for coercing small distributors into accepting unfair business deals using its market dominance.

Namyang Dairy Products Co. was found guilty of employing a series of unfair business practices such as forcing small retailers and distributors to accept more supplies than they needed, in breach of the Fair Trade Act.

"(Namyang) unfairly abused its market power and did not follow a corrective measure ordered by the Fair Trade Commission (FTC)," judge Kim Jung-hyoon of the Seoul Central District Court said in his ruling.

The FTC, the country's antitrust watchdog, in December 2006 ordered the firm to stop its practice of forcing small distributors to accept more products than they wanted.

Namyang, however, continued abusing its power by canceling contracts with small distributors when they complained about the unfair practices, court records showed.

The Namyang case was again caught by the FTC in May of last year when a phone conversation between a Namyang sales representative and a distributor belatedly emerged on the video-sharing website YouTube.

In the recording made about four years ago, the salesman is heard threatening and cursing at the store owner after he refused to accept more product than he could sell.

The ensuing public outrage prompted the president of Namyang to issue an apology and fire the salesman. Angry distributors and small stores threatened to boycott Namyang products in protest.

In a separate case, Namyang Chairman Hong Won-sik is standing trial on charges of evading taxes worth 7.37 billion won by stashing secret funds via deals involving expensive artworks.

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