By Park Si-soo
Some describe it as “grossly unfair.”
Costco Wholesale Korea, an American firm, is penalized for doing business in violation of municipal ordinances that force big retail outlets to close two Sundays per month, while Korean retailers appear to go unpunished.
But if you take time to understand how it all works, you will soon know better. It partially explains why Costco defies the Sunday ban to continue doing business in spite of facing hefty fines. It’s clearly because the American firm concluded that it can still make profit even after the fines are taken out from its bottom line.
Costco PR officials have clammed up, and do not respond to repeated calls for comment.
This case has ignited a debate among Koreans and foreigners over whether the U.S. retail giant should benefit from the previous court ruling on a lawsuit brought by Korean discount stores.
Frustration runs deep among some foreign readers who suspect that the Korean government applies “double standards” in regulating the business hours of Costco Wholesale and its three competitors.
As appeared on the front page of this newspaper’s Monday edition under the headline “Costco defies Sunday ban,” the American retailer will be fined 20 million won ($18,000) for defying an ordinance enacted by Seoul and other municipal governments to open its stores on every Sunday, while its three rivals ㅡ Lotte Mart, E-mart, and Home plus ㅡ will face no penalties for conducting the same sales activity.
“So it is okay for Korean chains to ignore the ban but an American one is fined? Bizarre by all accounts and double standards,” Ralph Long wrote on this paper’s website. Another reader Jeff Bublitz echoed this view, opining, “Lotte Mart, Home plus, and E-mart can stay open with no problems but Costco gets fined for doing the same thing? That doesn't sound fair.”
At a glance, their accusations look reasonable and the government appears to be trapped in nationalistic dogma to deal a blow to the flourishing American company in times of economic downturn.
Yet legal experts familiar with the case are certain that the unequal treatment is flawless by all accounts and the discriminative treatment against Costco is legally justifiable since Costco didn’t take part in a lawsuit raised to invalidate the ordinance.
This was jointly pursued by Lotte Mart, E-mart, and Home plus. Costco didn’t take part in the legal action. In June, the Seoul Administrative Court ruled in favor of the plaintiffs, giving them the green light to open every Sunday.
“Those who are doubtful about the unequal treatment lack basic knowledge of the law,” said Judge Cho Byung-koo, a spokesman for the Seoul Administrative Court. “Only companies involved in the lawsuit benefit from the ruling. This is the same in all countries around the world, including the United States.”
Cho went on to say, “As Costco was uninvolved in the suit, the company is still liable to close its stores two Sundays per month, as mandated by the ordinance.” He added that the ordinance’s effectiveness will remain intact until the Supreme Court nullifies it.
He said the case is being reviewed by an appellate court. The plaintiffs recently filed another suit with the Constitutional Court, questioning the constitutionality of the ordinance.
“If either the Supreme Court or the Constitutional Court rules favorably to the plaintiffs, Costco will also be given freedom to open every Sunday,” the judge said. “Before such ruling, however, Costco is liable to abide by it.”
Costco has taken no legal action so far.