The retail industry has begun preparing for the National Assembly audit, which will open on Oct. 6. With the Chuseok and National Foundation Day holidays overlapping and shortening the actual preparation period, each company is moving faster than in previous years. As Coupang's massive personal information leak is expected to land on the audit table, the Homeplus Co. case, Starbucks Korea's "May 18 Tank Day" controversy, and the overhaul of large discount store regulations that have been stuck for 14 years are also likely to be handled together. Maeil Dairies and OURHOME, among other food companies' successive industrial accidents, are also being discussed as likely to be put on the chopping block.
◇ Homeplus split by fate right before the audit
According to the industry on the 27th, the most certain flash point for the audit is Homeplus Co.. The Seoul Bankruptcy Court decided to terminate the rehabilitation proceedings on the 3rd of last month, but after Meritz Financial, the largest creditor, decided to provide the full 200 billion won in debtor-in-possession (DIP) emergency operating funds, it canceled the termination decision on the 21st and extended the deadline for approval of the rehabilitation plan to Sept. 4. Homeplus Co. formally reopened 67 stores on the 13th of this month. However, Sept. 4 is the final deadline under the Debtor Rehabilitation and Bankruptcy Act, beyond which no further extension is possible. Right before the audit begins, it will be decided whether the company continues or is liquidated.
The National Assembly already has a precedent of gearing up once and then backing down. The Democratic Party of Korea planned to hold a National Policy Committee hearing on the 27th of last month targeting Meritz and MBK Partners, but canceled it after Meritz decided to provide the 200 billion won support. Instead, a policy Q&A session was scheduled for the 21st, but it was held as a briefing due to the People Power Party's absence, and at this meeting Democratic Party lawmakers zeroed in on poor private equity oversight and the responsibility of financial authorities. MBK, the largest shareholder, did not appear before the National Assembly.
Although the emergency funding avoided an immediate hearing, there is a view that it is hard to see the Homeplus Co. issue disappearing from the audit table. In the National Policy Committee, there is room to address not only asset sales and management processes after MBK's acquisition but also the private equity oversight framework and the structure of Meritz's lending and recovery. Whether MBK Chairperson Kim Byung-ju will be listed as a witness again this year, as last year, is of interest.
Tied to whether Homeplus Co. goes bankrupt, the Trade. Industry Energy. SMEs. and Startups Committee is expected to see a head-on clash over amendments to the Distribution Industry Development Act. On May 19, the committee referred an amendment allowing early-morning deliveries by large discount stores and easing mandatory closures to the bill review subcommittee. The bill by Democratic Party of Korea lawmaker Kim Dong-a would maintain restrictions on offline operations while allowing online deliveries without limitation, while the bill by People Power Party lawmaker Kim Sung-won focuses on abolishing both late-night operating restrictions and mandatory closure rules.
The industry is skeptical about allowing early-morning delivery on the premise of sharing the burden, such as contributing to a co-prosperity fund. They say early-morning delivery requires separate logistics infrastructure and carries high delivery costs, offering limited performance improvement. There is analysis that strong pushback from small merchants and labor groups has stalled progress in the discussions.
◇ Coupang, backed by U.S. "discrimination" claims, takes the stage again this year
Coupang is expected to come up again this year, but the tone may change significantly. After a 624.6 billion won penalty surcharge over the personal information leak, trade variables are in play as the U.S. House Judiciary Committee raised concerns about discriminatory regulations by the Korean government, leading to predictions that questions on regulation and sanctions may not be as aggressive as last year. In a Fox News interview on the 23rd (local time), U.S. House Foreign Affairs Committee Chairperson Brian Mast said, "The Korean government is harming U.S. corporations like Coupang," and "It is also failing to deliver on promises to provide more semiconductors and ships and to support the United States." Mast is classified as part of the hard-right wing within the Republican Party.
Labor issues, however, are another matter. With accidents continuing, including a case on the 23rd in which a worker in his 40s at a Coupang logistics center in Gwangju, Gyeonggi, was transported in cardiac arrest after his neck was caught while operating a forklift, there is a view that questions could actually increase in the Environment and Labor Committee.
Whether serious accidents at food business sites will be addressed in the committee is also of interest. At Maeil Dairies' Pyeongtaek plant on the 9th of this month, two workers in their 50s who were cleaning the inside of a condensed milk storage tank collapsed and one died. At OURHOME in June, a worker affiliated with a subcontractor was caught in a conveyor belt at the Yongin Plant 2. It was just over a year since a fatal accident at the same plant last year. After the worker died during treatment, the Ministry of Employment and Labor (MOEL) launched an investigation into violations of the Serious Accidents Punishment Act and is also conducting an integrated special inspection on industrial safety and labor.
◇ Starbucks' "Tank Day" likely to split the ruling and opposition parties
The "Tank Day" controversy at Starbucks Korea is also highly likely to spill into the audit. Whether Chung Yong-jin, chairperson of Shinsegae Group, will be listed as a witness again this year is of interest. Last year, the Trade. Industry Energy. SMEs. and Startups Committee selected Chung as a witness in relation to protecting consumer information on online platforms.
The direction of the ruling and opposition parties' clash may diverge. Regarding the fact that government ministries responded by, among other things, temporarily suspending a service member welfare memorandum of understanding project that the Ministry of National Defense had signed with Starbucks Korea, rebuttals may arise over whether a government-involved boycott was appropriate. The recent mood of Starbucks gradually resuming social contribution projects with the government also lends weight to this view.
The gift certificate issue that arose during the consumer refund phase also falls under the National Policy Committee's purview. The Korea Fair Trade Commission is reviewing whether to revise the "standard terms for new-type gift certificates," which currently allow refunds only after using at least 60% of the balance. There is a possibility the issue will broaden into a debate over regulations on prepaid recharge funds.
With about a month left before the audit, the retail industry is busy gauging who will be called and what arguments to make. A retail industry official said, "Requests for audit materials are pouring in at the same time as holiday peak-season responses," adding, "We don't know which standing committee will call us, so we have no choice but to prepare on all fronts for now."