The 22nd National Assembly Sets Sail... Intense Standoff Over Distribution Regulation Act

Key Bills of the 21st National Assembly Mostly Continue to Be Discussed in the 22nd
"Will Stronger Regulations Be Created During Discussions?" Concerns Raised

As the 22nd National Assembly convenes, controversy over the relaxation of distribution regulations is spreading. While the government is pushing for deregulation in distribution, the opposition parties and labor unions are demanding stricter regulations, leading to a standoff.

According to the distribution industry on the 7th, the Mart Industry Labor Union under the Service Federation of the Korean Confederation of Trade Unions plans to hold a rally in front of the National Assembly on the 22nd, urging the revision of the Distribution Industry Development Act to enforce mandatory holidays for large marts on public holidays.

The Distribution Industry Development Act includes regulations on mandatory holidays for large marts. The current distribution law allows heads of basic local governments such as mayors, county governors, and district heads to designate two public holidays per month as mandatory closure days for large marts, and to designate weekdays as mandatory closure days through agreement with stakeholders. Additionally, stores are prohibited from operating from midnight to 10 a.m., making early morning delivery impossible.

National Assembly Building. Photo by Hyunmin Kim kimhyun81@

Because of this, in January this year, the President and the Office for Government Policy Coordination held a "Public Discussion on Livelihood Issues with the People," announcing plans to abolish the regulation requiring two mandatory closure days per month on public holidays for large marts and to improve the system to allow early morning delivery. Starting with Daegu, cities such as Cheongju in Chungbuk, Seocho-gu and Dongdaemun-gu in Seoul, and Busan have changed mandatory closure days to weekdays through ordinances and local government notices. Along with this, the Seoul Metropolitan Council revised an ordinance, and Seocho-gu issued an administrative notice on the 27th of last month to reduce the operating restriction time for large marts and semi-large stores (SSM) to one hour. This is a complete lifting of the regulations that had blocked early morning delivery by large marts.

On the other hand, labor unions are urging legal amendments to enforce "mandatory closure on Sundays." Some opposition parties also support this. Jeong Hye-kyung, a Progressive Party lawmaker, said at the elected members' general meeting, "Instead of reducing or abolishing mandatory closure days for marts, let's expand them to other distribution sectors."

During the 21st National Assembly, more than ten bills were proposed to ease mandatory closure regulations for large marts, but they were discarded due to the expiration of the term. No bills to amend the distribution law have been introduced yet in the 22nd National Assembly.

The distribution industry argues that as e-commerce's offensive strengthens, operating restrictions on large marts must be lifted. According to the "Major Distribution Companies' Sales Trends" announced by the Ministry of Trade, Industry and Energy in April, offline sales fell by 0.2%, but online sales increased by 22.2%, marking the highest growth since 2021 (22.6%). A distribution industry official said, "We must recognize that countless ordinary citizens rely on large marts for their livelihoods," adding, "Discussions on the bill should be conducted carefully to ensure fair competition, protect consumers' choices, and revitalize the domestic economy."

Meanwhile, the franchise industry is closely monitoring moves to amend the "Fair Transactions in Franchise Business Act" to guarantee bargaining rights to franchisees similar to labor unions. This law was pushed by the opposition party to be directly submitted to the plenary session in the 21st National Assembly but was discarded due to term expiration. The opposition has a strong intention to reintroduce it. The industry strongly opposes it, pointing out that small-scale franchise businesses lacking manpower and capital have no proper means to respond when franchisee groups make unreasonable demands to headquarters.

According to the "Distribution of Brand Franchise Stores by Industry" data released by the Fair Trade Commission on the 9th of last month, among all franchise brands, 8,988 brands have fewer than 10 franchise stores, accounting for 72.3% of the total 12,429 brands. The Fair Trade Commission, the competent authority, also holds the position that careful discussion is necessary. An industry official said, "According to the amendment, small-scale franchise businesses will inevitably be swayed by franchisees," adding, "There are concerns that regulations may be further tightened during the 22nd National Assembly's bill discussions."

The e-commerce industry is on alert for the possibility of re-discussing the Platform Act, which was halted during the 21st National Assembly. The "Fair Competition Promotion Act" includes provisions to pre-designate core platform operators with monopoly power and monitor abuse of market dominance. Both the government and political circles emphasize the necessity of this law.

The Fair Trade Commission planned to reveal the outline of the Platform Act in December last year but postponed it due to strong opposition from the industry. The Democratic Party also pushed the related "Online Platform Fairness Act" (Onple Act) as a livelihood legislative task in the 2022 regular session, but postponed it due to industry backlash and the Yoon Suk-yeol administration's move toward self-regulation.

The industry fears that excessive dual regulation of domestic platforms could worsen the industry itself. Another distribution industry official pointed out, "It could be a paradox where the more a company grows, the harder it is to operate," adding, "Especially for startups, it is like telling them to maintain their company size at the current level."