Customers enter an CJ Olive Young store in Seoul in this undated file photo. Yonhap

CJ Olive Young was hit with a penalty for demanding monopolistic event contracts with its suppliers and passing unfair business costs onto them, the nation's top antitrust watchdog said, Thursday.

The largest health and beauty product store chain here was fined 1.89 billion won ($1.43 million) by the Fair Trade Commission (FTC). The authority also pledged to take stern measures against any retail business operators that infringe on the rights of their product suppliers.

According to the watchdog, CJ Olive Young forced its supply chains to hold any promotional events at other beauty store chains while it ran a similar event in 2019. This is a violation of an act prohibiting any firm from demanding such exclusive contracts, according to the FTC.

The CJ affiliate also did not reach the return margin while selling their products at a discounted price between March 2019 and June 2021. The company received supplies at a reduced price under the pretext of running a promotional event. CJ Olive Young raised the price after the end of the event and went on to sell their products. However, the firm did not return the margin worth 800 million won, even when all the products were supplied at a discounted price.

The beauty chain operator also collected unfair costs from their suppliers in the name of "information-processing fees" between 2017 and 2022. The company offered information on sales of their products via its online system and received up to 3 percent of net purchases from them.

The suppliers had to pay the unnecessary cost "without their willingness," which the authority considered a breach of the law.

"The latest sanction heightened vigilance against such unfair behaviors by big retail business operators," an official from the authority said. "We will keep taking strict and immediate actions when identifying any acts violating the rights of suppliers in the local retail market."