Expiration Set for November 23
Small Business Community Calls for Extension
"Fails to Reflect the Changed Distribution Landscape"
Some Call for Amendments to Certain Provisions
The small business sector is on high alert as the expiration of the Distribution Industry Development Act approaches this November. Industry representatives insist that a minimum safeguard is needed to protect small business owners and traditional markets from large corporations. However, some argue that the law is outdated, drawing attention to the direction of future revisions.
A Korean barbecue restaurant in Seoul has installed numerous air coolers at its entrance. The air conditioners alone were not enough to cope with the record-breaking heatwave. The heartfelt efforts of self-employed business owners during the economic downturn are truly moving. Photo by Hyunmin Kim
On September 8, the Korea Federation of Micro Enterprises, the Korea Federation of Merchants Associations, and the Korea Supermarket Cooperative Federation issued a joint statement urging the immediate extension of the Distribution Industry Development Act. In their statement, the industry groups emphasized, "Since its introduction in 2012, the Distribution Industry Development Act has played a key role in protecting traditional markets and local commercial districts from the unchecked expansion of large discount stores and super supermarkets (SSMs)." They further stressed, "Not only should the act be extended, but this is also an opportunity to re-legislate the now-ineffective mandatory holiday closure system and to include large food material marts under its regulatory umbrella, thereby strengthening the Distribution Industry Development Act."
The Distribution Industry Development Act was enacted in 2009 and revised in 2012 to strengthen regulations on the operations of large discount stores and SSMs. The main provisions restrict late-night operations of large discount stores (with a total floor area of 3,000 square meters or more) and SSMs (with a total floor area between 300 and 3,000 square meters) and require them to close at least twice a month. In 2015, a sunset clause was introduced, stipulating that the regulations would expire every five years, allowing the National Assembly to extend, abolish, or revise the law through discussion each time. The most recent extension, passed in 2020, is set to expire on November 23, 2025.
Small business owners and lawmakers believe the act should be extended once more, given that traditional markets and local commercial districts are struggling due to sluggish domestic demand. They argue that if regulations on large discount stores and SSMs are lifted, consumer demand may shift overwhelmingly toward large capital. There is already active movement in the National Assembly to extend the act for another five years. On August 28, Assemblywoman Oh Sehee of the Democratic Party, a member of the National Assembly's Trade, Industry, Energy, SMEs and Startups Committee, sponsored a partial amendment to the act that would extend the main provisions restricting the operations of large discount stores and SSMs for another five years.
However, as persistent criticism has pointed out that the act does not reflect changes in the distribution environment, some provisions may come under scrutiny. Article 2, Section 4, which defines SSMs, is a prime example. When the law was first enacted, the vast majority of SSMs were directly operated by large corporations. Today, however, about 50% of SSMs are franchise stores operated by small business owners with their own capital. As a result, there is growing consensus that the current provision-which broadly includes both directly operated and franchise stores under regulation-should be revised to better fit the current situation and prevent negative effects on small business owners.
An industry official stated, "Given the strong will within the ruling party to extend the act once more, it seems unlikely that the overall trend will be reversed." The official added, "However, even among small business owners, there is ongoing concern that the Distribution Industry Development Act has only benefited e-commerce or has ended up tightening the noose on small-scale franchise operators. Therefore, it is possible that detailed supplementary measures will be introduced this time around."
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