Korean Fair Trade Commission investigating Zespri

Most Read Today's Headline
Korean Fair Trade Commission investigating Zespri

The Korean Fair Trade Commission (KFTC) is currently investigating New Zealand fruit exporter Zespri over alleged monopolistic practices, according to the Chilean Kiwifruit Committee.

The action follows claims Zespri obtained exclusivity deals with South Korean supermarket chains E-Mart and Lotte Mart, which many believe deliberately cuts off South American suppliers.

Committee president Oscar Villegas has told www.freshfruitportal.com the commission sought information from the Chilean industry about the company's business methods in South Korea, and whether this would negatively affect consumers or warrant sanctions.

"We responded in great detail to the solicited information and we have already learned, as is the knowledge in the global industry right now, that after testing all the information that arrived at the KFTC, surely from multiple sources, that they have considered there are sufficient antecedents to pass to the second stage of the case," he says.

"We still need to find out what this second stage means, but at least the unjust commercial actions that are affecting the profitability of our producers in Korea are being pursued.

"As a committee we have collected and supplied all the information about abuses committeed by Zespri in Korea, and complying with our role as a representative of the Chilean industry we will take all actions necessary to defend fair trade and profitability for our growers."

Fedefruta president Antonio Walker has told www.freshfruitportal.com the Chilean and New Zealand industries should be complementary in global markets.

"With Fedefruta and personally I have had direct contact with the president of New Zealand's kiwifruit growers. We have kept an exchange of emails in which we have said as producers we are looking at complementing rather than competition," he says.

"I have said to him if we want to be more complementary than competing in terms of trade, we can't be tripping each other over, so in asking Korean supermarkets for exlusivity that's disloyalty.

"Between producers from Chile and New Zealand things are very good, it's just missing a gesture from Zespri."

Walker highlights the fact New Zealand is growing a lot of yellow kiwifruit which yield higher prices than green varieties, and that in itself helps to complement the Chilean product.

"As Fedefruta we have a dream to have not only a stronger association with New Zealand, but with other countries like Peru, Australia, and Argentina, and we should be more proactive due to the concentration of buyer power; supermarkets have to fusion in the Northern Hemisphere to form stronger buying (power).

"Supplying countries in the Southern Hemisphere need to do the same to get more strength. We must strengthen the unity within the industry, between producers, in committees, and we should supplement other Southern Hemisphere countries to counteract the  concentration of purchasing power in the Northern Hemisphere."

Zespri's view: 1 in 2000

A Zespri spokesperson told www.freshfruitportal.com it was worth noting the KFTC conducts a significant amount of cases of this sort each year, while the company has assisted the commission in its enquiries.

"The Korea Fair Trade Commission (KFTC) is investigating aspects of Zespri's arrangements with some of the big  Korean supermarket chains. To put this in perspective the KFTC conducts over 2000 of these sorts of inquiries a year," he says.

"Once we have their report we’ll have an opportunity to respond to any issues they identify.  We briefed growers on the existence of the KFTC investigation at our recent round of grower meetings held through-out the country in the second half of August.

"As part of this we informed growers of the potential remedies if Zespri were found to be in breach in any way – one of the remedies is a penalty which we estimate could be as high as $US160,000."

He says these types of issues arise 'from time to time' when you export to 60 countries around the world.

"Our reputation is important to us and we  seek to act in accordance with local laws in all of the markets in which we trade. We are competing strongly with Chile in Korea, particularly given the cost advantage our Chilean competitors enjoy over New Zealand kiwifruit with an 11% tariff compared to the 45% tariff that applies on New Zealand kiwifruit."

Related story: Zespri takes hold of Korean Chilean kiwifruit market: Chile takes notice


Subscribe to our newsletter