South Korea’s antitrust watchdog will investigate distribution networks of finished cars, automotive parts and drugs to comb out predatory or unfair practices in dealership.

According to industry sources on Tuesday, the Fair Trade Commission (FTC) will probe three industries – automobile, auto parts and pharmaceuticals – to find out whether there have been any unfair practices related to sales agents. Based on the findings, the agency will develop a framework for standardized contracts in the next four months to prevent any future unfair business practices by bigger companies.

Clothing brands, food and beverage makers and telecommunications companies came under the similar probe by the FTC last year.

The antitrust agency under the fair economy-vowing Moon Jae-in administration has been investigating big companies across the board to eradicate “gapjil” – high-handed, heavy-handed conduct of abusing one’s higher position and power since the country’s high-profile power abuse scandal of Namyang Dairy in 2013. The company came under a shameful spotlight after it forced its sales agents to buy more-than-needed products (even the amount they never ordered), causing customers to boycott its products.

The FTC for the investigation into pharmaceutical companies is expected to define the range of distributors first as the distribution structure is complicated in Korea. Sales agents are estimated to total 1 million, but there is no official record about it.

Hyundai Motor Group, which could be a major target in the automobile sector, denied any of unfair practices across the group companies but pledged full cooperation for the inspection. Dealer contract form it uses also was drawn up in cooperation with the FTC in 1999, it added.

By Yoon Jin-ho and Lee Ha-yeon

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