French luxury maison Chanel has come under investigation by the Korean Free Trade Commission (KFTC) for the alleged breach of South Korea’s Free Trade Act.
The KFTC has launched a probe into allegations that the brand is placing unfair restrictions on duty-free operators who distribute its products to retailers in the country.
Due to the negative impact of the outbreak of COVID-19, Korea has relaxed certain regulations for duty-free operators to distribute goods to local vendors, but Chanel is refusing for its products to be sold at potentially lesser prices.
“If a firm does not permit its business partners to sell its goods at a certain price and threatens to impose a penalty or cut supplies in any future business relations, this is a contravention of the Fair Trade Act,” an official from KFTC told the Korea Times.
He added that if Chanel is found in violation of the act, it could potentially build a case for judicial review and call for administrative actions such as imposition of fines, or even prosecution in the worst case scenario.