Musinsa raided for allegedly tying merchants' hands with other platforms

The Fair Trade Commission sent investigators to seize documents at the headquarters of fashion marketplace Musinsa over claims of violating fair trade laws.

Fashion marketplace Musinsa operates online and offline stores that sell a large selection of brands including its own Musinsa Standard brand. Pictured is Musinsa's mobile app. [MUSINSA]

The Fair Trade Commission (FTC) launched an on-site investigation into Musinsa on Monday for allegedly violating fair trade law.

Public broadcaster KBS reported on Monday that the fashion marketplace prohibited merchants from selling their products on different platforms if they did not have a written agreement.

Musinsa allegedly penalized merchants who sold on different platforms through such measures as exclusions from the retailer's promotional offer events.

The firm also reportedly requested that merchants monitor their prices and inventory so that their revenue primarily comes from Musinsa.

The FTC ordered investigators to seize documents, including contracts, related to its listed sellers at Musinsa’s headquarters in Seongdong District, eastern Seoul, KBS said.

The antitrust watchdog sent investigators to Musinsa’s offices, a company spokesperson confirmed to the Korea JoongAng Daily. The marketplace did not provide more details about the investigation.

Korea’s Monopoly Regulation and Fair Trade Act prohibits online platforms from using their position in the market to restrict merchants from doing business concurrently with competing platforms. The FTC has been surveying 40 vertical market platforms, which are industry-specific marketplaces like Musinsa, from July to identify any potential issues concerning competition and innovation in the e-commerce sector.

Musinsa is a fashion marketplace that operates both online and offline stores. Its mobile app had the most active users amongst fashion retailers for 22 consecutive months up to July, according to industry tracker IGAWorks.

BY KIM JU-YEON [kim.juyeon2@joongang.co.kr]