Suppliers protest cost of discount store regulations

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Suppliers protest cost of discount store regulations

Suppliers of large discount store chains rallied yesterday at Seoul Station, central Seoul, to demand elimination of what they call the “evil distribution law.” Protesters included farmers, fishermen and officials from small and medium enterprises and stores that rent space at large discount stores.

The Korea Federation of Retail Producers said suppliers and small merchants at the large discount stores have lost a total of 3 trillion won ($2.7 billion) due to regulations imposed on large discount stores by local governments in accordance with an amendment to the Distribution Industry Development Act.

The amendment was passed by the National Assembly on Jan. 1 and restricts operating hours of large discount stores to between 10 a.m. and midnight with two mandatory closure days a month. But many local governments implemented the regulations on their own starting last June in an attempt to boost mom-and-pop stores and traditional markets.

“We are at the brink of bankruptcy. We have lost approximately 3 trillion won because we trade with large discount stores run by conglomerates. The regulations clearly violate the equality and freedom of businesses,” said the federation survival task force that organized demonstration.

The federation emphasized that the distribution law is typical of populist legislation with the simple premise that consumers will visit traditional markets and mom-and-pop stores if the government regulates large discount stores.

“Politicians and local government officials are only trying to gain popularity by bashing conglomerates, especially through their large discount stores. The distribution law has no legitimacy,” said the federation. “Suppliers of large discount store chains were even excluded from the distribution industry development committee members list, who should discuss with the local governments about the contents of the operational regulations. It means that local government officials will not listen to the actual victims of the regulation.’’

The federation added that no other country has such regulations. “Although the government says it intends to promote small businesses which it believes affected by large retailers, our suppliers who are also small independent retailers are seeing great loss from the regulations,” said a spokesman for Homeplus, a major supermarket chain.

The federation announced that it is planning a nationwide rally June 26 with 10,000 protesters to call for the withdrawal of the amendment.

By Kim Jung-yoon []
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