Final Approval and Implementation of Consent Decision to Improve Transaction Practices between Convenience Stores and Suppliers(2025.4.24)

— First case since the introduction of the consent decision system under the Large-scale Retail Business Act —

 

The Korea Fair Trade Commission (KFTC, Chairperson Han Ki-jeong) announced on April 21 that it has finalized a consent decision regarding alleged violations of the "Act on Fair Transactions in Large Retail Business" (hereinafter, the "Large-scale Retail Business Act") by four major convenience store headquarters (hereinafter, the "Big 4 Convenience Stores").

 

The companies involved are GS Retail Co., Ltd. (GS25), BGF Retail Co., Ltd. (CU), Korea Seven Co., Ltd. (7-Eleven), and Emart24 Co., Ltd., which together account for 96.4% of the convenience store market based on the number of franchise stores.

 

The consent decision system allows companies under investigation for suspected legal violations to voluntarily propose corrective measures, such as compensating victims or improving trade practices. If the KFTC, after collecting opinions from stakeholders, deems these measures appropriate, it may close the case based on the prompt implementation of the proposed remedies.

 

The KFTC had been investigating the Big 4 Convenience Stores for allegedly imposing excessive penalties on suppliers for failure to deliver products on time (hereinafter, "non-delivery penalties") and for collecting promotional fees for new product placements based on criteria favorable to the retailers. During the investigation, the companies voluntarily submitted corrective proposals in May–June 2024 aimed at improving trade practices and fostering cooperation with suppliers.

 

Promotional fees refer to payments made by suppliers to large retailers for displaying their new products in stores, typically for products launched within the past six months.

 

To assess the validity and appropriateness of the corrective measures, the KFTC conducted a one-month stakeholder consultation process, collecting input from suppliers, franchise owners, and relevant ministries (including the Ministry of Trade, Industry and Energy and the Ministry of SMEs and Startups).

 

The key contents of the consent decision are as follows:

1. Reduction of Non-Delivery Penalties:
   The share of non-delivery penalties retained by headquarters will be reduced to levels similar to those of large supermarkets (approximately 6–10% of the undelivered amount). This includes improved calculation standards, clearer proof procedures, and revisions to standard contracts to enhance transparency and reduce suppliers’ burdens.
2. As a result, the penalties paid by suppliers to headquarters are expected to decrease by approximately KRW 480 million to KRW 1.6 billion annually per company. Importantly, the share of the penalties distributed to individual franchise owners will remain unchanged to avoid any disadvantage to them.
3. Fairer Criteria for Promotional Fees for New Products:
   The definition of "new product" will be revised from “products launched within 6 months at each convenience store” to “products launched within 6 months in the domestic market.” Suppliers will directly input the domestic launch date into the system, improving the transparency and fairness of the process.
4. Win-Win Cooperation Fund and Free Services:
   The Big 4 will contribute a total of KRW 3 billion to the Win-Win Cooperation Fund managed by the Foundation for Large and Small Business Cooperation, Rural Affairs. This fund will support joint private-sector initiatives to enhance suppliers’ technological development and productivity. Additionally, services such as advertising and information provision, previously valued at approximately KRW 5.3 billion (KRW 3 billion in advertising and KRW 2.3 billion in information services), will be offered free of charge.

In conclusion, the KFTC decided to approve the final consent decision after considering that:

• The proposed remedies are balanced with the level of sanctions likely to result from a formal violation ruling,
• Quick implementation benefits suppliers and serves the public interest by improving trade practices,
• Most suppliers expressed satisfaction with the proposed measures.

This case marks the first application of the consent decision system under the Large-scale Retail Business Act, introduced in July 2022. It is significant for swiftly correcting unfair practices in the convenience store sector and protecting suppliers from harm.

 

Moving forward, the KFTC will closely monitor the implementation of the consent decision in cooperation with the Korea Fair Trade Mediation Agency and will continue to crack down on unfair practices in the distribution sector to establish a fair trading environment.