Page 239 - CRC_One Report 2021_EN

Business Overview and Performance Corporate Governance Financial Statements Enclosure

The Office of Trade Competition Commission has (5) Unfairly forcing manufacturers/vendors to buy or
issued several announcements, pursuant to the Trade pay service fees for the benefits of retailers/wholesalers
Competition Act so as to prescribe guidelines for without any sound reason, for example, by requiring
the enforcement of the law. One of the announcements manufacturers/vendors to buy some or all of retailers/
gives the guideline on how to review unfair trade practices wholesalers in an unfair manner, or unreasonably
between retailers/wholesalers and manufacturers forcing them to pay for the advertising of goods
or vendors (“Announcement on Unfair Trade Practice while retailers/wholesalers are major beneficiaries;
Review Guideline”), which has taken effect from
20 July 2019. Based on the guideline, activities that (6) Giving unfair assignments to staff of manufacturers/
may be unfair or cause damages to manufacturers/ distributors, without their consent or without prior
vendors include: agreements. For example, manufacturers/distributors
are forced to pay staff of retailers/wholesalers or
(1) Setting buying prices or buying goods from manufacturers/ forcing staff of manufacturers/distributors to work
vendors at the rate lower than normal prices, or forcing at the business places of retailers/wholesalers and
manufacturers/vendors to lower prices of goods assist with works that normally belong to retailers/
that have already been delivered and accepted wholesalers with aim to reduce retailers’/wholesalers’
without any sound reason; expenses except in events of exemptions mentioned
in the “Announcement on Unfair Trade Practice
(2) Demanding unfair economic benefits by requiring Review Guideline”;
manufacturers/vendors to award benefits that they need
not give or that is too much without any reason (7) Unfair refusal to accept all or some goods ordered
when taking into account interest manufacturers/ for a private brand/house brand of retailers/
vendors will likely get. These benefits, for example, wholesalers, which are manufactured based on
are in the form of listing fees, fees for goods’ special specific standard, format and type without a sound
corners, performance fees or additional discounts reason, without the fault on the part of manufacturers/
on special conditions; rebates, and discounts for distributors, or without prior notice except in events
lost goods after acceptance, etc; that manufacturers/distributors agree to accept
the refusal and retailers/wholesalers pay for
(3) Unfair and unreasonable return of goods, which happen damages that are generally incurred from refusal; and
not on the fault of manufacturer/vendor or is carried out
without any prior agreement or without consent. (8) Other unfair trade practices by retailers/wholesalers
For example, goods are returned because agreements that may cause damages such as delaying
are changed from purchase agreements to consignment payments for goods, estimating purchase volumes,
agreements; or ending business contacts in retaliation against
manufacturers/distributors’ refusal to comply with
(4) Using unfair consignment agreements that require retailers’/wholesalers’ conditions, or unreasonable
manufacturers/vendors to agree to unfair conditions delisting or delisting made for a reason not
that put them at serious disadvantage when mentioned in agreements.
compared with normal consignment, or forcing specific
manufacturers/vendors to enter into consignment These measures have posed significant restrictions
agreements instead of purchase agreements in order for in business operations and expansions, which are
retailers/wholesalers to reap benefits from consignment designed to promote free and fair trade.
agreements just like from purchase agreements;
As the Group’s retail businesses are considered
business operators under the Trade Competition Act,
their operations and expansions are subject to the law.

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