FTC dismisses investigation filed by local cosmetics importer vs L’Oréal

2022.01.10 15:26:47 | 2022.01.10 15:47:26

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South Korea’s antitrust agency is under fire for neglecting a local importer pleading for help from unilateral supply cut for 18 months by multinational cosmetics company L’Oréal.

The Maeil Business Newspaper discovered that the Fair Trade Commission in a letter on Dec. 24 to local cosmetics importer LNC Company rejected its file of complaint against L’Oréal for violating the country’s fair trade act as the matter did not apply to antitrust issue. The letter came one month after LNC filed complaint with the FTC in the end of November.

In June 2012 LNC signed a deal with U.S. cosmetics manufacturer Henry Thayer Company to exclusively supply its products in Korea. Thayers brand became widely known among young Koreans through local beauty Youtubers.

Supply was halted after L’Oréal acquired the skincare brand Thayers Natural Remedies from Henry Thayer Company in June 2020. L’Oréal demanded LNC to hand over marketing right in Korea. When the Korean company denied, supplies were cut off.

The company suffered 3.7 billion to 4.5 billion won ($3.7 million) in revenue losses heading into 20th month since product supply has been suspended. The company had to send out 11 employees.

In November, LNC filed a complaint against L’Oréal with the FTC. The agency, however, responded that the issue is not subject for investigation.

The FTC is known to have explained to LNC that there were not enough evidence pointing to L’Oréal having direct responsibility. Lawyers project the antitrust agency dismissed the issue due to complexity in the matter as it involves overseas headquarters.

Still the antitrust agency has the role to defend local companies versus power abuse. LNC’s legal firm said that the FTC did not even bother to carry out site investigation before dismissing the claim.

By Park Hong-joo and Lee Eun-joo

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]