Image Credits - The Korea Herald
Companies in South Korea will be fined if they reduce the amount of product in a package while keeping the same price, without giving notice. The government wants to stop this practice called “shrinkflation” to better protect consumer rights, the antitrust regulator said on Friday.
Under planned new rules, makers of everyday products like milk, coffee, instant noodles, toilet paper and shampoo must inform customers if they are downsizing the product but not lowering the price. According to the Fair Trade Commission (FTC), these companies have to put shrinkflation notices on the product packaging, in stores or on their websites for three months starting from the day the quantity changes.
The goal is to ensure companies cannot secretly give customers fewer products for the same money without making it clear to consumers that the package size has gotten smaller while the price stayed the same.
Starting from August 3, a new regulation will impose fines of 5 million won (approximately U.S.$3,667) for the first violation and 10 million won for subsequent violations. This addresses the issue of shrinkflation, where companies reduce product sizes without lowering prices, following public complaints and a government investigation last year.
An FTC official stated that the commission had decided to stipulate that corporate practices of downsizing products while maintaining prices without any notice would constitute unfair transaction acts. He added that this move was expected to help resolve issues of asymmetric information between customers and manufacturers and create a better transaction culture.
Late last year, following a month-long investigation, the government confirmed that 37 products of nine types, including cheese, beer, and milk, had reduced in quantity or size without a corresponding decrease in price. Shrinkflation practices are not currently illegal under existing laws.