"Over a Month Since Opening, Again" ... Distribution Industry Struggles with Consecutive Business Adjustment Requests

Small Business Owners Near New Department Store Raise Complaints
"All Permits Obtained, Double Regulation Unfair"

As business adjustment requests from local small business owners have been submitted against Lotte Department Store Dongtan Branch, which has been open for over a month, controversy over 'double regulation' on large store openings is resurfacing.

Two months after opening, "Request to restrict sales items"

According to the distribution industry and the Ministry of SMEs and Startups on the 8th, the Gyeonggi Southern Supermarket Cooperative, consisting of about 550 stores in six cities in southern Gyeonggi including Suwon, Hwaseong, and Anseong, recently submitted a business adjustment request demanding shortened operating hours and restrictions on food sales at Lotte Department Store Dongtan Branch. They are reportedly requesting shortened operating hours and other measures on the grounds that since the department store also sells food, it inevitably harms the operations of small supermarkets.

A Lotte Department Store official stated, "We were notified by the Ministry of SMEs and Startups of the business adjustment request for Dongtan Branch at the end of last month," adding, "We will actively engage in the voluntary business adjustment consultation process after confirming the specific demands of the cooperative (small business owners)."

Rite of passage for new store openings

The business adjustment system is a mechanism where, if a large corporation's business negatively affects or is likely to affect the management stability of local small businesses, the Ministry of SMEs and Startups mediates to recommend postponing the start of business for a certain period or adjusting product categories. If adjustment fails, strong sanctions such as fines or orders to comply with business adjustments can be recommended or mandated, and in the worst case, temporary suspension of business must be considered.

When Shinsegae Department Store opened its new Art & Science store in Daejeon last August, the Daejeon Mart Cooperative also filed a business adjustment request with the Ministry of SMEs and Startups, and negotiations failed until the last minute, making it difficult to finalize the exact opening date as the opening approached. Shinsegae Simon, a Shinsegae affiliate opening the Jeju Premium Outlet in Jeju Island, also faced delays in opening due to opposition from local merchants and ultimately received a business adjustment recommendation from the Ministry last month to restrict the entry and sales of 372 overlapping brands. Shinsegae Simon accepted these conditions and is preparing to open the outlet this month with only about 60 brands. The Hyundai Seoul in Yeouido, which opened in February this year, also went through the business adjustment process.

Distribution industry: "Unnecessary additional regulation"

Distribution companies argue that it is unfair to be subjected to such additional regulations under the "Act on the Promotion of Mutual Growth between Large Enterprises and Small and Medium Enterprises (Mutual Growth Act)" even after submitting a commercial impact assessment and local cooperation plan and obtaining approval for store openings under the "Distribution Industry Development Act" at the early stage of business. Moreover, under the current business adjustment system, even if a business adjustment request is withdrawn, it can be resubmitted within six months from the opening date, leaving distribution companies vulnerable to endless disputes.

For this reason, Costco, when opening its Incheon Songdo branch in 2017 and Gyeonggi Hanam branch in 2019, proceeded with openings despite business adjustment requests from local supermarket cooperatives and government recommendations to temporarily suspend business starts, voluntarily paying fines of 50 million won each. A distribution industry official pointed out, "The Distribution Industry Development Act and the Mutual Growth Act were created out of the need to protect traditional markets and small merchants, but if the same regulations are imposed twice, companies inevitably suffer serious damage to business stability."

This content was produced with the assistance of AI translation services.