Ministry of SMEs Requests Fair Trade Commission to File Complaint Against GS Retail for Unfair Profit Taking

Violation of Subcontracting Act... 9 Small and Medium Enterprises Suffer Damage

[Asia Economy Reporter Kim Cheol-hyun] The Ministry of SMEs and Startups (Minister Lee Young) announced on the 19th that it held the '21st Mandatory Prosecution Request Review Committee' and requested the Fair Trade Commission to prosecute GS Retail for violating the Subcontracting Act.

GS Retail caused damage to nine small and medium-sized enterprises (SMEs) by unlawfully collecting performance incentives, promotional expenses, and information provision fees, violating the Subcontracting Act. From November 2016 to September 2019, while outsourcing the manufacturing of fresh foods such as lunch boxes to eight subcontractors, GS Retail deducted amounts equivalent to 0.5% or 1.0% of the purchase price from the payment for supplies without justifiable reasons, collecting a total of 6.879 billion KRW.

During the same period, GS Retail held promotional events such as monthly waste support funds and beverage giveaways, deducting 12.613 billion KRW from the payment for supplies as part of the total promotional costs, thereby imposing the burden on the subcontractors.

Additionally, from February 2020 to April 2021, GS Retail signed information provision service contracts with nine subcontractors and deducted from the payment for supplies an average monthly amount ranging from 5.2 million KRW to 48 million KRW, collecting a total of 2.738 billion KRW. GS Retail had previously received an order to prevent recurrence and a fine of 24.368 billion KRW from the Fair Trade Commission for these violations. The Ministry of SMEs and Startups decided to request prosecution considering the significant damage GS Retail caused to small and medium enterprises.

Lee Dae-hee, Director of the Small Business Policy Office at the Ministry of SMEs and Startups, said, "The mandatory prosecution request system is a policy to protect small and medium enterprises from unfair transactions by businesses in a superior position in transactions," adding, "Through this mandatory prosecution, we hope a fair trading environment will be established in the convenience store industry where suppliers can receive their payment in full."