District warns Costco it will face fine

The Korean unit of U.S. retail giant Costco Wholesale could face a second penalty of 20 million won ($18,000) if it goes ahead with its plan to open its warehouses on Sunday, an official said yesterday.

The U.S. retailer is banned from doing business on the second and fourth Sundays of every month as part of an ordinance meant to help revitalize Korea’s traditional markets as well as mom-and-pop stores.

Korea’s largest retailer E-Mart and other local retail chains have challenged the ordinance in several local courts and won injunctions to delay the implementation of the ban, paving the way for them to resume operations as normal.

Costco Wholesale did not take the legal step and shut down its facilities every other Sunday for six weeks.

However, the U.S. retailer resumed its business on Sept. 9, a move that prompted Seoul’s southwestern Yeongdeungpo local government, home to Costco Wholesale, to slap a penalty of 10 million won on it on Thursday.

“Costco Wholesale will be subject to a penalty of 20 million won for a second violation of the ordinance if it opens its warehouses [this Sunday],” said Jeon Young-jin, an official handling the issue at Yeongdeungpo District.

Every subsequent violation will result in the imposition of a 30 million won penalty, Jeon said.
Costco Wholesale has said on its Web site that it will close only on New Year’s Day, Lunar New Year’s Day and the Chuseok holiday, the Korean harvest festival that this year falls on Sept. 30.

Jeon’s comment came days after Costco Wholesale Korea’s country manager, Preston C. Draper, argued that his company’s business is being unfairly disadvantaged by the enforcement of what he described as an invalid ordnance.

“Costco believes that the principles of equal protection under the law should apply to all similarly situated parties,” Draper said in a statement posted on Costco Wholesale Korea’s Web site.

“And, in light of these recent court rulings, we should also be allowed to operate our warehouses on Sundays, just like all other large marts.”

Repeated attempts to reach Costco Wholesale officials for comment were unsuccessful. Yonhap