[Why&Next] Coupang Penalized, Supermarkets Deregulated... Dawn Delivery Gains Momentum

Distribution Industry Development Act Amendment Referred to Industry Committee Subcommittee
Review Expected to Accelerate After National Assembly Committee Reorganization
Large Supermarkets to Be Allowed Dawn Delivery Services
Key Points: E

The government has imposed a record fine of over 600 billion KRW on Coupang, the country's largest e-commerce platform, for a personal information leak, and is now expected to accelerate legislation that would allow large discount stores to offer early-morning delivery services. This move comes as calls grow—especially among politicians who have been monitoring public sentiment following the June 3 local elections—to rectify the "uneven playing field" in the domestic retail market.

According to the National Assembly and related industry sources on June 18, the Presidential Committee on Regulatory Reform is currently seeking ways to rationalize regulations on large discount store operations. Park Yongjin, Vice Chairman of the Regulatory Reform Committee, told The Asia Business Daily, "Apart from legislation in the National Assembly, the government will also review whether there are ways to ease regulations on large discount stores," adding, "We will gather opinions on overall regulatory policy and implement changes accordingly."

Plenary Meeting of the National Assembly's Industry, Trade, Energy, Small and Medium Business Committee. Yonhap News Agency

Debate Over Easing Mandatory Closure Regulations for Large Discount Stores Reignites

Vice Chairman Park recently commented on his social media that while the mandatory closure system for large discount stores was introduced with good intentions, "policies cannot be maintained by good intentions alone." He said, "It is time to re-examine regulations established based on market conditions from over ten years ago to see if they fit today's consumer environment."

He stated, "For dual-income households, weekends are virtually the only time for grocery shopping, and if offline stores are closed, their spending does not flow to traditional markets but to online platforms," further pointing out, "While weekend operations are restricted for large discount stores, there are no regulations on early-morning delivery platforms." He added, "Coupang and Market Kurly operate 24 hours a day, 365 days a year, while large discount stores are required to close twice a month. Rather than protecting traditional markets, the regulations have only served to strengthen online platforms and early-morning delivery service providers operating in a regulatory blind spot."

The industry is paying attention to the fact that Vice Chairman Park’s message was issued just one day before the Personal Information Protection Commission announced a record 624.6 billion KRW fine against Coupang on June 11. This move is being interpreted as an intention to check the influence concentrated around Coupang, the number one e-commerce company, and to reorganize the retail market order.

An industry insider noted, "In the run-up to the local elections, discussions about easing regulations, which had stalled due to concerns about public opinion, have returned to the spotlight in tandem with the imposition of fines on Coupang." He added, "Coupang has been dominant in the online platform market because there have been no operational restrictions and because it secured a dense logistics network through large-scale investment. If large discount stores are allowed to offer early-morning online delivery and operational regulations are relaxed, they will be able to use their nationwide outlets as logistics centers and provide a wider variety of products, thereby becoming more competitive."

National Assembly’s Industry Committee: "Review of Distribution Law Amendments After Committee Reorganization"

Lawmakers are also moving quickly to improve related systems in response to concerns about the "uneven playing field" between online and offline retailers. According to the National Assembly’s bill information system, the Industry, Trade, Energy, Small and Medium Business Committee of the National Assembly submitted a proposed amendment to the Distribution Industry Development Act on May 19, which would allow online early-morning delivery services for large discount stores and Super Supermarkets (SSMs), as well as ease the mandatory closure days from twice a month. This amendment, originally sponsored by Kim Donga of the Democratic Party of Korea and Kim Sungwon of the People Power Party in February, marks the start of full-scale legislative action.

The proposed amendments would allow online delivery services for large discount stores without restriction during mandatory closure periods and operational hour limitations. They would also abolish the requirement for two mandatory closures per month, leaving such decisions to the discretion of local authorities. The amendments, currently under review by the Industry, Trade and Intellectual Property Subcommittee, are pending deliberation. A subcommittee official explained, "As negotiations for the composition of the second half of the 22nd National Assembly are currently underway, discussions on the relevant bills have been postponed," adding, "Once the process is complete, we expect the review to proceed promptly."

Consumer response to easing regulations on large discount stores has also been positive. According to a mobile survey conducted in April by WinGKorea Consulting at the request of the Korea Distribution Association, more than half (59.5%) of 2,000 adult men and women nationwide responded that mandatory closure regulations for large discount stores should be abolished or eased. The percentage of respondents who said the rules should remain unchanged was 30.4%.

The responses to regulations on operating hours for large discount stores also showed a higher percentage in favor of easing (32.0%) and abolishing (26.8%)—a combined 58.8%—compared to maintaining the status quo (31.6%). As for permitting early-morning delivery services by large discount stores, 65.1% were in favor, while 15.8% were opposed. However, regarding the regulation restricting the opening of large discount stores within a 1km radius of traditional markets, more respondents favored "strengthening or maintaining" (46.5%) rather than "easing or abolishing" (43.1%), indicating divided opinions on further market expansion by large discount stores.

Asked about their primary channels for purchasing daily necessities over the past month (multiple responses allowed), 89.8% reported using offline large discount stores, followed by online platforms at 75.0%, convenience stores at 46.6%, specialty stores at 39.1%, and traditional markets at 37.7%.

However, resistance from organizations representing small and medium-sized merchants advocating for the protection of local businesses remains a variable. Park Heeseok, Chief Policy Officer of the National Assembly’s Industry Committee, stated in a review report on the proposed amendments, "The issue of allowing online delivery services outside the operating hours of large discount stores is highly controversial, with sharp differences of opinion between large stores and small merchants." He advised, "It is necessary to adequately balance consumer convenience and distribution innovation with the protection of local businesses and labor rights, and to ensure sufficient discussion and coordination among stakeholders in the legislative process."

This content was produced with the assistance of AI translation services.