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U.S. Retailer Costco "Will Open on Sundays"
By Choi Byeong-tae
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U.S. retailer, Costco Wholesale Corporation announced it will not follow government regulations that restrict business operations on Sunday claiming that the regulations were unfairly enforced in a statement written in the name of Costco's representative.

On September 20, Costco posted a notice on their website in the name of Korea's country manager, Preston Draper.

Draper stated in the announcement that Costco first decided to follow the ordinance and closed their stores every other Sunday for 6 weeks. However, since the court ruled that the government cannot apply the regulation any longer in a lawsuit filed by major retailers in Korea, Costco announced their decision to continue their operations.

Korea's three major retailers and large supermarkets filed a lawsuit at the Seoul Administrative Court earlier this year claiming that the Distribution Industry Development Act violated the company's right to business activities.



The court stated problems in the way the local government handled the process of enacting the ordinance and ruled it invalid. The retailers which had filed the lawsuit resumed business on Sundays.

However, Costco did not take part in the legal battle, and had its operations restricted. Neglecting procedures, Costco opened its store on September 9, the second Sunday in September, and was fined for negligence by the city of Seoul.

In their announcement, Costco stated their belief that, "the principles of equal protection under the law should apply to all similarly situated parties."

They claimed that it was unfair to have their business restricted just on the grounds that they did not take part in the lawsuit and added, "we strongly believe that as a result of the court rulings, our members, our employees, our suppliers and our businesses are being unfairly disadvantaged by the Gu's enforcement of an invalid Ordinance."

The government and local government have stated that they will strictly enforce the legislation and ordinance if Costco pushes ahead with their business operations.

An official from the Ministry of Knowledge Economy said, "They can't just ignore Korea's domestic law and operate their business." Kang Hee-eun, the head of Seoul's Business Incubation Division explained, "We will have to fine them according to the regulations. We will increase the fine by 10 million won every time they violate the restrictions on business operations."

Some are pointing out that Costco may have considered the investor-state dispute settlement when deciding to push ahead with their operations despite Korea's domestic law.

Attorney Jung Dong-won of Lee International IP & Law Group mentioned, "The enactment of the Distribution Industry Development Act clearly states a change in the government's policy to protect small businesses, and if a foreign investor suffers damages due to this legislation, it can be subject to the investor-state dispute settlement."

Costco is a chain of membership warehouses with facilities all over the world. As of the end of August, Costco operated 608 stores around the world including the U.S. It currently has 7 stores in Korea including its stores in Yangjae and Yeongdeungpo, Seoul.

Costco Korea was criticized for exclusive business activities such as designating specific credit cards, with which customers could make their payments.

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