LF Square operator fined for shifting promotion costs, demanding rivals' sales data

LF Networks, the operator of the LF Square shopping complex, has been sanctioned by the Korea Fair Trade Commission for passing promotional event costs onto suppliers and store tenants without following proper procedures and for demanding business information — including sales figures and retail commission rates at rival stores.

The Fair Trade Commission said Tuesday it had issued a corrective order and imposed a fine of 418 million won ($295,000) on LF Networks for violating the Large-Scale Retail Business Act.

The corrective order requires LF Networks to refrain from the same or similar violations going forward and to notify all current suppliers and store tenants of the sanctions imposed against it.

LF Networks is a large-scale retailer operating four stores, including LF Square locations in Incheon and Yangju. Its sales last year totaled about 90.3 billion won.

According to the Fair Trade Commission, LF Networks ran 29 joint promotional events with suppliers and store tenants between December 2022 and December 2024, shifting a combined 58.61 million won in promotional costs onto 174 businesses.

In the process, the company issued incomplete agreements that did not specify the products or event periods involved, or that lacked the signatures of the suppliers.

Under the Large-Scale Retail Business Act, a large-scale retailer seeking to pass promotional event costs onto suppliers must first enter into a written agreement specifying the exact product items and event period before the event takes place.

The agreement must be signed or sealed by both the retailer and the supplier, and the retailer must hand over a copy of the signed document to the supplier at the time of signing.

Investigators also found that LF Networks had demanded business information from suppliers, including sales figures and commission rates at other retailers.

From July 2022 to October 2025, the company asked 47 suppliers and store tenants to provide sales figures and retail commission data for their products sold at nearby department stores and other competing retailers in the vicinity of LF Square locations.

The Large-Scale Retail Business Act prohibits large-scale retailers from improperly demanding such business information — including sales figures and commission rates at other operators' stores — from suppliers. The provision is intended to prevent that information from being used for unfair trade practices such as coercing participation in promotional events or adjusting commission rates.

The Fair Trade Commission determined that both sets of conduct violated the act's provisions prohibiting the transfer of promotional costs and the improper demand for business information.

The commission said the case was significant in that it put large-scale retailers on notice that shifting promotional costs onto suppliers without a lawful agreement, and demanding business information from them, are serious legal violations — not practices to be taken lightly.

It added that it would continue to monitor and take strict action against unfair trade practices by large-scale retailers, including the transfer of promotional costs and improper demands for business information from suppliers.