The Fair Trade Commission has launched an investigation into alleged unfair trade practices by Daiso, a popular Japanese household goods store, industry insiders said Wednesday.

According to local industry officials, the FTC is currently investigating Daiso A-Sung, which operates Daiso, for allegedly violating large-scale retail distribution laws. The commission reportedly sent a team of investigators to Daiso’s local headquarters to obtain the company’s distribution reports in order to check its use of promotional expenses.

The FTC is also looking into whether Daiso has been exploiting its employees or committing unfair reductions in delivery prices or unfair return policies.

The commission announced earlier this year that it would look into the status of unfair trade practices among “boutique stores,” as part of its crackdown on unfair practices. 

The term “boutique store” refers to specialized retail stores focusing on specific product groups such as home appliances, health and beauty. The FTC is also reportedly looking into the business practices of other popular specialty stores such as Hi-Mart and Olive Young.

Kim Sang-jo, the head of Korea’s antitrust watchdog, announced last month that the commission would establish new measures to eradicate corporate bullying in an effort to protect smaller businesses. Franchise businesses have been under heavy government scrutiny for alleged unfair or illegal business practices.

On Tuesday the FTC revealed that as of the end of July, 1,277 firms were on its monthly watch list, including Samsung Group, Hyundai Motor Group, SK and Hanwha.

By Julie Jackson (juliejackson@heraldcorp.com)