- Monitoring dealerships by disguising as customers and suspending supply when caught selling at lower prices
- Restricting resale to non-dealerships to control market prices
The Korea Fair Trade Commission (KFTC), chaired by Han Ki-Jeong, has decided to impose corrective orders and a fine of KRW 1.865 billion on Dunlop Sports Korea Co., Ltd. (hereinafter "Dunlop") for engaging in resale price maintenance (RPM) and conditional transactions.
Dunlop is an importer and distributor of popular Japanese golf brands such as XXIO and Srixon, with XXIO golf clubs being particularly favored among female golfers in Korea.
Leveraging its market dominance, Dunlop enforced resale price maintenance by setting and communicating fixed sales prices to dealerships, ensuring compliance by threatening penalties. Additionally, to control market prices, Dunlop restricted or banned dealerships from reselling golf clubs to non-dealerships, thereby preventing price competition between sellers.
① Resale Price Maintenance (RPM) Practices
Between January 2020 and April 2023, Dunlop:
- Set minimum sales prices for online and offline channels and notified dealerships accordingly.
- Enforced compliance by threatening penalties, including:
- Suspension of product supply
- Reduction of financial support
- Recall of already supplied golf clubs
- Termination of dealership contracts
To avoid legal risks, Dunlop deliberately refrained from documenting these price policies, instead delivering them only through verbal communication to prevent leaving evidence.
Furthermore, to strengthen compliance pressure, Dunlop not only suspended the supply of products that violated pricing policies but also included popular models like XXIO golf clubs in the suspension list.
Dunlop monitored dealerships through:
- Mystery shoppers: Undercover investigators who visited stores 7–9 times a year to check in-store prices.
- Daily online monitoring: Employees checked product prices on price comparison websites daily.
When dealerships were caught violating the policy, Dunlop enforced strict penalties, including supply suspensions of XXIO clubs and reductions in financial support.
Such practices constitute resale price maintenance (RPM), where a supplier forces resellers to sell at specific prices, restricting competition in the distribution process and limiting consumers’ opportunities to purchase products at lower prices.
This violates Article 46 of the Monopoly Regulation and Fair Trade Act.
② Conditional Transactions (Restricting Resale to Non-Dealerships)
Between January 2022 and April 2023, Dunlop:
- Prohibited dealerships from reselling XXIO and Srixon golf clubs to non-dealerships (i.e., unauthorized sellers).
- Non-dealerships, which do not have a direct trading relationship with Dunlop, could not be penalized with supply suspensions. However, if they offered lower prices, it could trigger broader price competition in the market, which Dunlop sought to prevent.
To control this, Dunlop:
- 2020–2021: Initially monitored unauthorized sellers’ prices and tracked barcodes to penalize the dealership responsible for supplying them.
- 2022 onward: Finding this insufficient, Dunlop completely banned dealerships from reselling to non-dealerships.
Dunlop enforced compliance through investigations, including:
- Undercover store visits and online monitoring to track unauthorized sales.
- Suspensions of popular XXIO products for non-compliant dealerships.
Such actions constitute conditional transactions, where a supplier unfairly restricts trading partners' ability to choose their buyers.
This practice limits competition and consumer choice, violating Article 45, Paragraph 1, Clause 7 of the Monopoly Regulation and Fair Trade Act.
KFTC’s Actions & Expected Impact
In 2009, the KFTC sanctioned six golf club distributors for similar resale price maintenance violations, imposing fines of up to KRW 400 million.
Dunlop, which was not implicated at the time, has now been found to have engaged in similar illegal practices, leading to a much heavier fine of KRW 1.865 billion.
This ruling sends a clear warning to the market against future violations and is expected to restore stricter compliance in the industry.
Additionally, by promoting free price competition among golf club retailers, consumers will be able to purchase golf clubs at more affordable prices.
The KFTC has pledged to continue monitoring the golf equipment market and strictly penalize practices that restrict price competition and harm consumers.