THE WHAT? Chanel is under investigation by The Korean Free Trade Commission (KFTC) in South Korea for allegedly flaunting the country’s Free Trade Act, according to a report by RLI.com.

THE DETAILS The luxury brand is facing allegations that it is putting unfair restrictions on duty-free companies to stop them selling the goods at reduced prices. However, Korean legislation has been relaxed in the wake of COVID-19 regarding how products can be sold and distributed in order to ease the impact of the pandemic.

According to a KFTC official, “If a firm does not allow a business partner to sell its products at a certain price and threatens to cut supplies or impose a penalty in any future business relations, this is a contravention of the Fair Trade Act.”

THE WHY? Luxury brands are often hesitant to sell premium priced goods at a discounted rate in order to avoid diluting the prestige nature of the product.

However, KFTC stated, “If Chanel violates the act, then we can bring a case for possible judicial review and apply administrative actions, accordingly, from imposing fines through to issuing a correction order or even prosecuting the brand, in the worst case scenario.”

 

Posted by Louise Prance-Miles | May 29, 2020 |