Ahead of the presidential election on June 3, the retail industry, including large supermarkets and delivery app companies, is closely monitoring the direction of regulations. The likelihood of regulations being intensified has increased due to the strengthening of mandatory closing days for large supermarkets and the introduction of a cap on delivery app commissions.
◇Large supermarkets call potential strengthening of mandatory closing day 'an outdated idea'
According to the National Assembly's legislative information system on the 23rd, there have been 14 proposals for amendments to the 'Distribution Industry Development Act' (hereinafter referred to as the distribution law) so far. Among these, 8 are bills aimed at strengthening regulations. They were proposed by lawmakers from the Democratic Party of Korea and The Progressive Party. The core idea is to maintain the current law's stipulation that requires large supermarkets to close on the second and fourth Sundays of each month to protect small businesses.
The Yoon Suk-yeol administration has pushed for regulatory improvements focused on abolishing the designation of mandatory closing days for large supermarkets as public holidays and allowing early morning online deliveries, but it has lost momentum. Additionally, Lee Jae-myung, the presidential candidate from the Democratic Party, recently hinted at plans to strengthen regulations, such as limiting mandatory closing days to holidays during a 'livelihood agenda announcement'.
The system of mandatory closing days for large supermarkets was introduced with the amendment to the distribution law in 2012. The core of the system mandates that large supermarkets like Emart, Homeplus, and Lotte Mart close on two Sundays each month to protect local businesses. However, consumer patterns have rapidly shifted from offline to online due to the COVID-19 pandemic.
The retail industry believes that the competitive landscape has shifted from 'large supermarkets versus traditional markets' to 'online versus offline'. In response, some local governments began revising ordinances to convert mandatory closing days for large supermarkets to weekdays since last year, but the industry holds that there are limitations without fundamental legal amendments.
A representative from a large supermarket said, 'Restricting operations with outdated regulations is an archaic idea,' adding, 'Considering the possibility of a regime change, we plan to strengthen online channels and renew stores to find new solutions.' Another representative noted, 'As we are targeted by various regulations and losing out in both online and offline competition, we are struggling to find new momentum, and the political sphere should seek ways to revitalize the stagnant economy rather than impose unconditional regulations.'
◇The delivery industry emphasizes the need to evaluate the effectiveness of reviewing bills that overturn the coexistence plan
The delivery industry is also on high alert. Last year, a coexistence plan for delivery platforms was barely reached, but there has been ongoing criticism and dissatisfaction over it being 'half-hearted'. In particular, the inclusion of a cap on delivery app commissions as one of Lee Jae-myung's top 10 pledges has raised speculation that regulatory levels may intensify.
According to the National Assembly's legislative information system, there are 22 bills related to regulations of platforms, including amendments to the Online Platform Fair Transaction Act (hereinafter referred to as the OPFTA) and the Electronic Commerce Act. These proposals were predominantly initiated by lawmakers from the Democratic Party of Korea, Rebuilding Korea Party, and The Social Democratic Party of Korea. The OPFTA aims to prevent unfair transactions and abuses of power among online platform operators and vendors by regulating the contractual relationships between them. The core idea is to strengthen penalties against dominant platform operators defined as monopolistic businesses to protect vendors and consumers.
In particular, the Democratic Party is reportedly considering initiating a separate bill to introduce a cap on delivery app commissions. The amendment to the Fair Trade Law proposed by Democratic Party member Lee Kang-il and others on the 28th of last month included a provision for establishing a ceiling on commission rates for online platform operators. Additionally, issues surrounding regulations related to delivery platforms are continuing, such as the Democratic Party's goal to reach an agreement with Baedal Minjok by July and the Fair Trade Commission's formation of a task force dedicated to handling delivery platform cases.
A related industry representative commented, 'This is essentially pressuring us to either introduce a cap on delivery app commissions or change commission policies,' adding, 'We must closely examine whether implementing a cap would be effective for small business owners and whether it would lead to any unintended side effects before enshrining it into law.'
◇The duty-free industry argues that a system reflecting changing consumer patterns of tourists is needed
Meanwhile, the duty-free industry holds the view that legal and institutional improvements are necessary for the survival and competitiveness of the industry. Last year, all four of the major duty-free operators recorded losses. As a combination of high exchange rates (the decline in the won's value) and changes in consumer behaviors of domestic and foreign tourists has created a situation that demands changes to outdated systems, industry representatives have voiced the need for reforms. They are calling for a revision of the standards for calculating patent fees (license costs) and adjustment of airport rental fee calculation criteria. Currently, patent fees are collected based on sales, while airport rental fees are calculated based on the number of departing passengers.
A representative from the duty-free industry remarked, 'The structure is no longer such that an increase in departing passengers leads to a rise in duty-free shop sales as it once did,' adding, 'We should consider alternative systems, such as calculating patent fees based on operating profit rather than sales. We hope that regulations and systems introduced based on the past will be reformed to reflect current realities and enhance industry competitiveness.'