[2025 Audit] Retail CEOs Bow Their Heads... Fair Trade Commission Warns Kyochon Over Shrinkflation: "Strict Action"

Heads of Major Retailers Testify at National Assembly Audit
Criticism Mounts Over Management Failures and Stealth Price Hikes

During this year's National Assembly audit, which is the first to be held since the inauguration of the Lee Jaemyung administration, the heads of major retail companies bowed their heads in succession.

According to political circles and related industries on October 15, Kim Byungju, Chairman of the private equity fund operator MBK Partners, which is the largest shareholder of Homeplus and has been seeking a new owner after filing for corporate rehabilitation, appeared as a witness at the National Assembly's Political Affairs Committee audit held the previous day. Despite repeatedly refusing to attend previous summons from the National Assembly, Chairman Kim made his first official appearance at this audit, stating, "I believe I must take social responsibility," and bowed his head in apology.

Kim Byungju, Chairman of MBK Partners, is responding to a lawmaker's question during the National Assembly's Political Affairs Committee audit on the Fair Trade Commission and the Personal Information Protection Commission held on the 14th. On the left is Kim Kwangil, CEO of Homeplus. Photo by Kim Hyunmin

However, regarding the corporate rehabilitation situation at Homeplus, Chairman Kim emphasized that "each of the 13 partners is responsible for their own area, and my responsibility is fund raising," stressing that he was not involved in decision-making. He added, "The only way for Homeplus to survive is for the merger and acquisition (M&A) to succeed," and appealed, "We must make the M&A happen, so please give us your support."

Since June, Homeplus has been pursuing an M&A through a "stalking horse" method, in which a conditional acquisition contract is signed with a preferred bidder and then put up for public auction. However, as there was no significant progress with this method, Homeplus and its sale advisor, Samil PwC, switched to an open competitive bidding process on October 2. Kim Kwangil, Co-CEO of Homeplus and Vice Chairman of MBK Partners, explained, "Our original goal was to secure letters of intent (LOI) from potential buyers through the stalking horse method, but we were not successful," adding, "The court has ordered an open auction, so we are continuing to persuade and negotiate with potential buyers."

Chicken franchise Kyochon Chicken faced harsh criticism at the Political Affairs Committee audit. Kyochon Chicken reduced the portion size of its boneless chicken by 200 grams without lowering the price, sparking controversy over "shrinkflation." Lee Heonseung, a lawmaker from the People Power Party, pointed out to Song Jonghwa, CEO of Kyochon F&B, "Kyochon was the first in the industry to introduce delivery fees in 2018, ushering in the era of 20,000-won chicken," and added, "Given the controversy at that time, this decision should have been made more carefully. Even now, you must clearly notify consumers."

In response, CEO Song said, "Although we posted a notice on our website, I acknowledge that we did not sufficiently inform customers," and promised, "We will strengthen notifications quickly across all channels, including delivery apps."

Kyochon's raw material supply issues were also raised. Park Chandae, a lawmaker from the Democratic Party, stated, "Kyochon's raw material supply rate has recently dropped to the 30% range," and argued, "When some franchisees reported the headquarters to the Fair Trade Commission, Kyochon refused to renew their contracts after just two months, which is effectively a retaliatory measure."

In response, Joo Byeonggi, Chairman of the Fair Trade Commission, said, "The case is currently under investigation, and if unfair trade practices or damages to franchisees are confirmed, we will take strict action in accordance with the law." CEO Song explained, "We recognize that there is a structural problem of repeated supply instability," and added, "Since the beginning of this year, we have been reviewing stabilization measures such as diversifying the supply chain."

On the same day, Park Daejun, CEO of Coupang, appeared as a witness before the Industry, Trade, and Energy Committee. He was criticized for Coupang's settlement cycle with sellers being around 60 days, which is much longer than the roughly 10-day cycles of competing platforms. CEO Park responded, "We are aware of the difficulties faced by our sellers and will work to improve the situation by shortening the settlement period and conducting internal reviews." Regarding allegations that Coupang forces sellers to advertise, he said, "Our internal policy strictly prohibits forcing advertising fees," and added, "If any employees engage in such practices, we will take strict action."

Park Daejun, CEO of Coupang, is greeting at the 2025 National Audit held on the 14th at the National Assembly Science, Technology, Information and Broadcasting Committee. Photo by Yonhap News