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Watchdog to determine punishment soon on Amore Pacific for unfair business: sources

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(Globalpost/GlobalPost)

SEJONG, June 10 (Yonhap) -- South Korea's antitrust watchdog is expected to determine its level of punishment soon for Amore Pacific Corp. on charges that the country's largest cosmetics maker abused its market power against sales outlets and smaller companies, government sources said Tuesday.

Some speculate that the fines could be tens of billions of won, given the punishment in a similar case before.

Amore Pacific is accused of forcing sales outlets to take more products than they can afford by abusing its market influence, an allegation that the company has denied. The Fair Trade Commission (FTC) started its investigation after the allegations were first raised in June last year.

This case renewed the controversy over large conglomerates' power over smaller companies in supply deals, which were brought to public attention in May last year when an employee of Namyang Dairy Products Co. was recorded on tape insulting and threatening a small store owner to buy more stock than he can sell.

Sources said that the Seoul branch of the FTC has wrapped up its probe on Amore Pacific and notified the company of the results. If the company responds with its own stance within two weeks, the FTC would then set a date for deliberation on the case.

"We expect that corrective orders, including fines and others, could be announced next month," an FTC official said.

The FTC stopped short of elaborating on the level of punishment, but it is expected to be based on an earlier ruling on Namyang Dairy, which was ordered to pay 12.3 billion won (US$12.1 million) in fines.

At the time, the FTC also had referred some former and incumbent company executives and employees to prosecutors for more investigation.

"Corrective measures will be determined based not just on our investigation (into Amore Pacific) but also precedents, including the Namyang case," another FTC official said.

The level of fines is usually determined by taking into consideration the amount of sales related to unfair business activities and the duration and the nature of such violations, among other things.

Exact figures on sales that Amore Pacific might have generated through such unfair business practices have not been disclosed.

Given that Amore Pacific's total sales last year stood at 3.89 trillion won, which was more than three times the 1.23 trillion won of Namyang Dairy, some observers speculate the fine could be tens of billions of won.

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http://www.globalpost.com/dispatch/news/yonhap-news-agency/140610/watchdog-determine-punishment-soon-amore-pacific-unfair-busi