Posted : 2012-10-15 17:02
Updated :  

Defying local law

Costco should honor Sunday closing rule

Seoul City officials raided three Costco stores in Seoul that opened their doors again Sunday despite the city’s ordinance to have large discount stores close on the second and fourth Sunday of every month.

They uncovered 14 violations and slapped a temporary suspension on the sale of livestock products at two of the three outlets for violating meat preservation regulations. Seoul City also imposed a fine of 60 million won on the American retail giant for violating the Sunday closing rule.

This is the first time that Costco has faced a business suspension in an escalation of conflict with Seoul City over its alleged violation of the ordinance. On Oct. 10, the city also raided the three Costco stores in Seoul and found that they violated a total 41 regulations.

The raids are seen as retaliatory measures against the retailer’s failure to follow the Sunday closing rule.

It defies our understanding that Costco, which operates eight stores in Korea, continues to violate the law while doing business here.

Costco argues that it is entitled to operate its warehouses because the city’s ordinance was ruled illegal in June but the argument is wrong, considering that it was not party to the lawsuit.

Seoul City imposed the Sunday closing rule on discount chains in April under the Distribution Industry Development Act that took effect in January to protect small mom-and-pop stores and traditional markets. The large local discount chains filed an injunction seeking to halt the effectuation of the ordinance and in June the Seoul Administrative Court ruled the regulation illegal, allowing the giant retailers to stay open all week.

From a legal point of view, Seoul City is right to say that Costco should not benefit from the ruling because it was not a party to the lawsuit. That granted, municipalities will have to consider asking the Ministry of Knowledge Economy to amend the relevant law to toughen penalties. This is all the more so, given that each Costco store in Seoul reportedly posts sales of as much as 1.2 billion won a day on the weekend at the expense of only 10 to 20 million won in fines.

Aside from legal matters, it’s not good for giant retailers such as Costco to pursue profits blindly without taking into consideration difficulties facing small merchants who are increasingly being cornered by big retailers’ indiscriminate forays. Costco also needs to pay attention to complaints even coming from its customers regarding the company’s unlawful act.

Seoul City, for its part, deserves blame for resorting to outdated revengeful clampdowns to bring a foreign retailer into submission. It’s like a tax agency conducting an audit to retaliate against a company that doesn’t comply with its instruction.

What’s clear is that Costco should recall the old saying, “When in Rome, do as the Romans do.’’ It’s time for the retail giant to step back and try to observe local regulations.
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