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FTC probes convenience store franchisers after shop owners threaten collective action

2018.07.18 14:14:06 | 2018.07.18 15:42:45
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South Korea’s Fair Trade Commission (FTC) has initiated an on-site investigation on the country’s third and fourth largest convenience store franchisers 7-Eleven under Lotte Group and E-Mart24 under Shinsegae Group in search of any unfair practices toward franchisees, a move suspected of trying to win favor with convenience store owners readying collective action against another double-digit hike in minimum wage.

According to sources from the retail industry on Tuesday, the antitrust watchdog searched the headquarters of 7-Eleven and E-Mart24 to investigate on possible unfair practices. Officials from the companies said they are not sure why they came under the probe.

The inspection came after the FTC Chairman Kim Sang-jo told reporters on Monday that he will order an extensive investigation to about 200 franchise headquarters in the latter half to help ease the cost strain shop owners were under following the hike in minimum wage.

Convenience stores largely run by retirees in Korea were among the hardest hit after the minimum wage went up by 16.4 percent from the beginning of the year against last year’s level under the Moon Jae-in administration’s goal to make the hourly wage base 10,000 won ($8.9) within three years.

Shop owners across the country vowed collective action - general strike and even joint shop closure - if legal wage base went higher.

The Minimum Wage Commission last week raised next year’s minimum wage by another 10.9 percent to 8,350 won.

The probe is expected to stretch to the two top convenience store chains CU and GS25, which could spark controversy over excessive meddling by authorities as no wrongdoings have been found to trigger the probe and about translating the blame on franchisers for policy failure.

By Lee Yoo-jin and Choi Mira

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]

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