South Korea’s Fair Trade Commission on Tuesday greenlighted a set of voluntary rules agreed to by convenience store operators including the minimum distance between each store to quell excessive competition.
Five members of the Korea Association of Convenience Store Industry, CU, GS25, 7-Eleven, Mini Stop and C-Space, along with nonmember E-Mart 24, came up with the voluntary agreement on rules to curb excessive competition in the course of opening, operating or closing stores.
Under the deal, franchisees of rival convenience store chains should open their stores 50 to 100 meters away from each other in an effort to avoid market saturation.
This is the first time the convenience stores have set the minimum distance since 2000, when a similar restriction of 80 meters was abolished out of concerns of collusion.
Under the agreement, the operators will also provide ample information on the status of other convenience stores in the neighborhood, including those of rival brands, for those wishing to open a branch.
They have also pledged to refrain from demanding that a franchise store open during early morning hours (midnight to 6 a.m.) if the branch has been in the black for three months.
Upon the FTC’s approval, these rules will apply to some 38,000, or 96 percent, of convenience stores nationwide.
Kim Sang-jo, chairman of the FTC, said the regulations could ease saturation and improve management conditions of franchisees of convenience stores.
The number of convenience stores here has rapidly shot up to at least 40,000 as of last year, driven by an increase in single-member households as well as diversified categories of products sold 24/7.
The FTC said it would support convenience store operators in following the rules and ensure the agreement helps to stabilize the market. Those who violate the rules must submit a statement of rectification to the FTC within 15 days after the notification of a violation.
By Kim Da-sol (email@example.com)