The Ministry of Land, Infrastructure and Transport said on the 13th it will review a plan to have Korea Expressway Corporation (KEC) sign direct contracts with businesses operating at service areas nationwide. Currently, KEC signs contracts with intermediary operating firms, which then contract with the tenant businesses. Contracts between KEC and the intermediary operators are set to end in stages through 2030, after which KEC would shift to direct contracting.
The Ministry of Land, Infrastructure and Transport (MOLIT) moved to improve service area operations after criticism from President Lee Jae-myung. In a policy briefing last Dec., Lee said, "Why are the service areas so expensive when the food isn't good? It turns out that as payments pass through several stages, about half is skimmed off as rent and fees," adding, "Either consolidate the (service area) management companies into one, or have comprehensive management done directly."
MOLIT on the day released the results of an emergency, comprehensive two-week probe, begun on the 13th of last month, into unfair practices at service areas nationwide. The probe found that seven service areas had delayed payment of 5.3 billion won in supply fees to tenant businesses. The service areas with unpaid supply fees were: ▲two at Giheung ▲Chungju ▲Manghyang ▲Pyeongtaekho ▲Songsan Podo ▲Yesan Yedamho. It said 4.8 billion won has now been paid.
MOLIT said it believes the root cause of such unfair practices lies in the multi-layered contracting structure and decided to have KEC contract with and manage tenant businesses directly. KEC had used intermediary operators because it made managing tenant businesses easier, it said. MOLIT noted, "If we switch to a direct contract structure, the commissions tenant businesses pay to intermediary operators will disappear, which is also expected to lower sales prices of service area products."
MOLIT said it received a report during the probe that retired KEC employees were employed by subsidiaries of intermediary operators and were engaging in a form of lobbying. It also said it received a report that a retired KEC employee was taking referral fees from small business owners seeking to enter service areas and brokering connections to intermediary operators. MOLIT said, "If specific facts are confirmed regarding the reported unfair practices, we will take stern action."