The North Face Korea (distributed by Goldwin Korea) has been fined 5.2 billion won ($4.6 million) by the nation's Fair Trade Commission (FTC), according to a recent article in the Korea Herald.
The company was charged with coercing retailers to maintain prices at a level 10 to 15 percent higher than competitors by limiting discount rates and punishing violators with suspended or canceled contracts. Additionally, the company has refused to sell through e-commerce channels. The FTC claims that this is in violation of Korean laws that protect retailers' rights to compete freely.
The penalty is the highest to be charged by the FTC in Korea's history. In response, The North Face distributor Goldwin Korea announced plans for a counter-suit.
The North Face has been a top player in the Korean outdoor industry since its entry into the market in 1997. The Korean Herald reports that the FTC estimates the brand's market share at 30 percent, while The North Face claims that the share is closer to 15 percent. In either case, the company has worked hard to protect its image as a premium brand in the eyes of the Korean consumer.
Read the full Korea Herald article here.