The Fair Trade Commission has warned the Japanese Consumers’ Cooperative Union to halt its alleged abuse of product suppliers, which breaks the law on protecting subcontractors.
The antitrust watchdog on Tuesday ordered the association of consumer cooperatives to take measures to prevent such practices after determining that 519 firms were victimized by its alleged malpractice. A total of ¥3.894 billion is involved in the case — a record high.
Between September 2010 and June this year, the union unfairly forced companies that produce CO-OP private brand items on its behalf, including food and cosmetics, to offset some of the cost of the discounts it was offering shoppers, according to the FTC.
The amount involved stood at ¥2.563 billion.
The union also forced suppliers to buy back some ¥4.8 million worth of unsold goods and shoulder ¥2.6 million in product testing costs.
The law requires payments to subcontractors to be made within 60 days after products are supplied. The FTC said the cooperative failed to meet the deadline in some deals and is obligated to pay ¥1.323 billion in penalty interest as a result.
Established in 1951, the union had 357 member consumer cooperatives nationwide and some 26 million users as of March 2012, according to its website.
Officials at the union said that it plans to strengthen its compliance with the subcontractor law and other legislation aimed at ensuring fair trade by further recognizing its social responsibility.