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(Photo = GS Retail homepage) |
[Alpha Biz= Reporter Kim Jisun] Major convenience store chains in South Korea, including GS25, CU, and others, have decided to propose voluntary corrective measures in response to allegations of unfair practices against suppliers, instead of facing penalties from the Fair Trade Commission (FTC).
On the 19th, the FTC announced that it had decided to initiate the "consent decision" process regarding allegations of violations of the Large-Scale Distribution Business Act by four convenience store chains: GS25, CU, 7-Eleven, and E-Mart24.
The consent decision is a system in which, if the corrective measures proposed by a company are deemed appropriate, the FTC can conclude the case without determining whether the law was violated. This is the first time the consent decision process has been initiated under the Large-Scale Distribution Business Act since its introduction in July 2022.
An investigation found that the four convenience store chains had been charging suppliers damages at rates 2-3 times higher than the standard 10% rate when suppliers failed to deliver goods on time.
Additionally, the stores applied favorable criteria for new product listings, allowing them to collect promotion fees. The Large-Scale Distribution Business Act permits retailers to receive promotional fees from suppliers for new products within six months of their release. However, the stores applied arbitrary standards, using either the "domestic market launch date" or the "convenience store launch date" as the criteria.
The four convenience store chains have agreed to lower penalties for late deliveries, improve transparency in transaction terms, and adjust their promotional fee policies to reflect supplier autonomy. The exact reduction in penalty rates will be decided after consultations with franchise owners.
They also plan to introduce measures to enhance evidence procedures for new product listing fees and will contribute 3 billion KRW to a mutual cooperation fund, while offering 4.5 billion KRW worth of advertising and information services free of charge.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
