Korea’s antitrust watchdog has launched a probe into commission rates major retailers charge on vendors in an apparent move to press them into cutting their rates, industry sources said Tuesday.

According to the sources, the Fair Trade Commission on Monday opened a two-week-long investigation into the commission rates charged by the nation’s top two department store chains: Shinsegae and Hyundai.

“The probe appears to be designed to pressure the retailers to further cut their commission rates for vendors and have more vendors benefit from lower fees,” an industry source said.

In early November, the top three department stores ― Lotte, Shinsegae and Hyundai ― agreed to lower their commission rates by 3-7 percentage points for 1,054 vendors, about half of their total small and mid-sized suppliers.

However, the department stores have been under criticism that they have not “faithfully” delivered on the agreement, prompting the antitrust watchdog to start the investigation, sources said.

Vendors pay a certain percentage of their revenues to department stores as commission in return for space they use and promotional activities aimed at selling their products.

Retail giants have been under fire for charging higher commissions to smaller vendors than others, a long-held practice that many see as a heavy financial burden on the smaller businesses.

However, department stores find it hard to reduce commissions further as a prolonged economic downturn has driven down their sales, the sources said. (Yonhap News)