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Watchdog slaps $$1.6 million fine on Lotte, Shilla duty-free shops

Staff Writer |
South Korea's corporate watchdog said that it has imposed a combined 1.8 billion-won ($$1.6 million) fine on two duty-free shop operators - Lotte and Shilla - for colluding on discount events.

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Hotel Lotte Co., the operator of the country's biggest Lotte Duty Free, and Hotel Shilla Co., the accommodations unit of Samsung Group that operates Shilla Duty Free, allegedly colluded to exclude electronic devices from their regular promotions held five times a year between September 2009 and May 2011, according to the Fair Trade Commission (FTC).

They did not offer discount coupons or mileage services to their c$tomers who bought electronics like digital cameras, electric shavers and mobile phones, the watchdog said.

Such electronic devices marked a profit rate of 21-26 percent as of 2010, far lower than that of cosmetics with a range of 39-48 percent and sunglasses with 39-50 percent.

As a result, the companies took an undue profit of some 846 million won, the watchdog said.

In 2010, Lotte's duty-free b$iness posted 2.2 trillion won in sales, while Shilla logged 1.2 trillion won in sales.

"The FTC made the decision to strictly punish the duty-free shop operators for their coll$ion practices that have limited price competition," the watchdog said in a release.

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