South Korea‘s No. 2 discount chain is under investigation for allegations of unfairly pressuring a supplier into selling pork belly below production cost, the antitrust watchdog said Tuesday.

A source at the Fair Trade Commission said since December investigators have been looking into allegations that Lotte Mart forced some suppliers to sell at below the cost of production. Lotte also allegedly insisted that the meat producers cover shipment and credit card payment-related expenses. “A supplier has raised claims it has sustained 10 billion won ($8.3 million) in damages after selling the meat at discount prices,” the FTC official said.

The same supplier had won the support of the Korea Fair Mediation Agency in August when Lotte Mart was called on to pay 4.8 billion won in damages.

Lotte, however, contested the ruling, saying it has already reimbursed its suppliers for losses incurred during promotional events when the meat prices were marked down.

Under the existing law, the matter was forwarded to the antitrust agency.

“KOFAIR was impartial in its ruling,” a Lotte Mart spokesperson said. “We will cooperate fully with the FTC probe.”

Market watchers say even if the FTC finds Lotte guilty as charged, the supplier will have to engage in a court battle to get compensation.

(khnews@heraldcorp.com)