In an appeal over charges of taking about 35 billion won in unjust gains from subcontractors under labels such as performance incentives, GS Retail was fined 1.5 billion won. Unlike the first trial, which acquitted the company, the appellate court found that GS Retail used its superior position to unilaterally obtain benefits.
According to legal sources on the 21st, the criminal appeals panel 8-3 of the Seoul Central District Court (Presiding Judge Cha Seung-hwan, Director General) on the 15th fined the GS Retail corporation 1.5 billion won on charges of violating the Fair Transactions in Subcontracting Act. A former MD division head, a person surnamed Kim (executive director), who was prosecuted along with the company, was fined 50 million won.
From November 2016 to April 2022, GS Retail was brought to trial on charges of unfairly receiving a total of 35.6 billion won in performance incentives, information provision fees, and promotion costs from nine companies that supplied fresh foods (FF) such as convenience store lunchboxes and kimbap.
The first trial court acquitted them in 2024. At the time, the court said, "It is hard to see that GS Retail forced the payment of promotion costs," and added, "It cannot be concluded that paying promotion costs benefited only GS Retail and harmed the subcontractors."
The appellate court reached a different conclusion. The key issue on appeal was whether GS Retail held a "superior position" that could exert undue pressure on subcontractors. The court said, "These companies in effect depended on transactions by producing and supplying only FF products to GS Retail," and added, "There was very little room for the subcontractors to negotiate whether to pay performance incentives or the amount."
Whether GS Retail received performance incentives without justifiable reason was also at issue during the trial. The appellate court explained to the effect that "GS Retail received performance incentives even when purchase amounts fell from the previous year, contrary to the existing agreed terms," finding it improper. It added that in April 2018, even though the receipt ratio was raised from 0.5% to 1% of purchase amounts without any particular reason, the subcontractors could not raise objections.
A guilty verdict was also entered for the "information provision fees" received in place of performance incentives. When receiving performance incentives became a legal problem, GS Retail took information provision fees on the condition that it would provide subcontractors with data related to sales performance. However, the court found that information such as item-by-store sales performance and the share of sales with membership presented, which GS Retail provided, did not help the subcontractors.
The portion of promotion costs that GS Retail shared with subcontractors remained not guilty on appeal, as in the first trial. The court said, "From the subcontractors' perspective, convenience store owners' orders are necessary to produce and supply FF products," and added, "To reduce owners' disposal burdens, there was a need to increase orders even by bearing promotion costs such as disposal support funds."
Regarding the former MD division head, a person surnamed Kim, the court said, "Given the decision-making structure, it appears the person received reports on and approved the information provision fees," and entered a guilty verdict.