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South Korea convenience store operators agree to control competition

(Source: Korea Bizwire | December 4, 2018)

Convenience store operators in South Korea have recently agreed not to engage in cut-throat competition in the latest move to protect struggling franchisees.

The central point of the voluntary agreement asks for CU, GS25 and Seven-Eleven and three other convenience store brands to decide “carefully” on the location of a new convenience store where a rival store is already located.

The deal said that convenience stores of rival brands should be at least 50 meters away from each other. Currently, convenience stores of the same brand should be located at least 250 meters away from each other to make sure that they do not compete against each other.

The move aims to protect franchisees in a country where family-controlled conglomerates, have dominated the economy for decades.

“The voluntary regulation, if implemented in good faith, could help ease saturation and improve management conditions of franchisees of convenience stores,” Kim Sang-jo, chairman of the Fair Trade Commission, said in a signing ceremony of the voluntary deal in Seoul.

Last week, President Moon Jae-in instructed the antitrust chief to support a voluntary deal among convenience store operators meant to tackle saturation of the convenience store market.

Convenience stores have sprung up in commercial areas in Seoul and other major cities in recent years, driven by growth of single-member households.

Last year, the number of convenience stores surpassed 40,000, a dramatic increase from 1989 when the first convenience store opened in eastern Seoul.

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