South Korea

Soy sauce major Sempio fined for monopolising distribution

By RJ Whitehead

- Last updated on GMT

Sempio controls 53% of the Korean soy sauce market
Sempio controls 53% of the Korean soy sauce market

Related tags Marketing

South Korea’s biggest soy sauce company has been fined by the country’s monopoly commission for engaging in unfair business practices.

Korea’s oldest soy sauce brand, Sempio controls more than half of the domestic soy market. The company was fined more than US$700,000 for restricting its distributors and agents from selling its products to companies other than the ones it had approved between 2008 and last year.

In its adjudication, the Korea Fair Trade Commission’s anti-monopoly division said Sempio had stopped its distributors “from making transactions with supermarkets run by sole proprietors and retailers​”.

As a result, agents were only allowed to sell products to end users, such as restaurants and cafeterias.

‘Restrictive practices’

When a distributor or sales agent breached the restrictive policy on business territories or clients, Sempio defined such breach as an ‘abusive sale,' gave disadvantages, and kept on tracking and monitoring activities of such distributors or sales agents​,” the KFTC ruled.

These “disadvantages” included refusal to pay incentives and fees, and the “deprivation” of sales targets.

The authorities found that Sempio had at times put serial numbers or secret marks on packaging to catch out distributors that didn’t play by its rules.

“As a result of Sempio's implementation of the strict, restrictive policy on clients, competitions in pricing and services among distributors and between distributors and sales agents were radically blocked in the course of distribution of soybean sauce products from distributors and sales agents to supermarkets run by sole proprietors and other clients,” the KFTC highlighted in its report.

The commission subsequently banned Sempio from continuing to engage in these practices and levied the ban under Korea’s Monopoly Regulation and Fair Trade Act.

Regulator tightening up

The KFTC said its sanctions on Sempio would open up Korea’s soy sauce market to greater competition, given the company’s sizeable market share, by discouraging anti-competitive practices.

The countermeasures taken in this case are also expected to assure distributors, sales agents and micro-businesses of [greater] freedom in business activities, while bring business attention to practices conducted in an unfair manner for competition​,” the KFTC said. 

The move is part of the regulator’s drive to monitor unfair market practices by companies that are “closely related to the lives of ordinary citizens​”, it said, by imposing heavy penalties on violators.

Sempio, a private company whose turnover was worth US$222m in 2013, has not responded publicly to the fine.

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