Doosan Bobcat Korea Sanctioned by FTC for Forcing Joint Guarantees on Dealers

Doosan Bobcat Korea, a manufacturer and seller of construction and industrial equipment under the Doosan Group, has been sanctioned for demanding excessive collateral and joint guarantees from its dealerships.

The Fair Trade Commission (FTC) announced on June 21 that it has decided to issue a corrective order, including a cease-and-desist order, against Doosan Bobcat Korea for abuse of its superior bargaining position.

To secure the performance of debt obligations by its dealers, Doosan Bobcat Korea had already been receiving collateral based on the dealers' annual product sales.

Despite this, the company was found to have demanded that dealers provide third-party joint guarantors—individuals who provide their own assets as collateral for another person's debt—and required these guarantors to sign agreements assuming guarantee obligations, citing insufficient collateral.

Furthermore, Doosan Bobcat Korea required dealers to bear the burden of unpaid balances if a consumer failed to pay for products.

The company established terms of trade that allowed it to deduct unpaid product balances from the sales commissions paid to the dealers.

However, it was not confirmed that Doosan Bobcat Korea actually executed the collateral or withheld sales commissions from dealers due to customer defaults.

Following the investigation, Doosan Bobcat Korea ceased the practice of requiring dealers to provide joint guarantors and stopped accepting joint guarantees from third-party collateral providers.

Additionally, the company has removed the clauses regarding liability for product payment security and the offsetting of commissions from its contracts.

An official from the FTC stated, "We will continue to monitor suppliers like Doosan Bobcat Korea to ensure they do not unfairly use their superior bargaining position to disadvantage dealers."
 

(Photo: Courtesy of Doosan Bobcat, Yonhap News)
※ Please note: This article was translated by AI and may contain errors.