Final Confirmation of Fair Trade Commission's Consent Decision
First Case under the Large-scale Retail Business Act
GS25, CU, Seven Eleven, and Emart24, four convenience store chains under investigation by the Fair Trade Commission (FTC) for allegations such as imposing excessive damages on suppliers, will undergo the consent decree procedure.
The consent decree system is a procedure where a business operator proposes a reasonable corrective measure such as restoration or damage relief, and the FTC, after gathering opinions from stakeholders and recognizing the validity of the proposal, concludes the case swiftly without determining illegality. Although it does not make a judgment on illegality, it is regarded as a means to effectively remedy consumer harm and quickly restore competitive order.
On the 19th, the FTC announced that it decided to initiate the consent decree procedure regarding the four convenience store headquarters’ alleged violations of the Large-scale Distribution Business Act. The four convenience store headquarters are GS Retail (GS25), BGF Retail (CU), Korea Seven & Ministop (Seven Eleven), and Emart24 (Emart24), which together hold nearly 100% market share in the domestic convenience store market.
The FTC has been investigating since May whether the four convenience stores violated the Large-scale Distribution Business Act by imposing excessive damages (so-called non-delivery penalties) when suppliers failed to deliver products on time, and by applying new product standards favorable to the four convenience stores to collect new product entry incentives.
Before receiving the FTC’s review report, the four convenience stores voluntarily applied to the FTC to initiate the consent decree procedure, expressing their intention to improve the transaction order in the convenience store market and promote coexistence and cooperation with suppliers.
The proposal includes lowering the non-delivery penalty rate to reduce the burden on suppliers and transparently improving related calculation standards and collection procedures.
It also contains measures to rationally improve the standards for new product entry incentives, which had been applied favorably to the four convenience stores, while reflecting the autonomous intentions of suppliers and strengthening verification procedures.
The four convenience stores also proposed measures such as contributing a 3 billion KRW scale coexistence cooperation fund to support suppliers and providing advertising and information services currently operated for a fee free of charge, worth approximately 4.5 billion KRW.
The FTC stated regarding the decision to initiate the consent decree procedure, "Considering comprehensively the nature of the case, the effect of the corrective measures proposed by the applicant on improving transaction order, protection of suppliers as transaction counterparts, and the necessity of prompt action, we decided to initiate the consent decree procedure."
It further explained that it took into account the fact that the case involves civil matters related to compensation for damages due to non-delivery of ordered products, which are difficult to regard as serious and clear violations of the law, and that promptly implementing the corrective measures proposed by the four convenience stores would benefit the suppliers.
This decision to initiate the consent decree procedure is the first case since the consent decree system was introduced into the Large-scale Distribution Business Act in July 2022. The FTC plans to work with the four convenience stores to specify the corrective measures, prepare a provisional consent decree draft, and then submit the final draft to a small committee after collecting opinions from stakeholders and consulting related agencies.
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