Costco, S. Korea battle over Sunday closing rule

A Costco customer looks at a display of LCD HDTV televisions in this file photo in San Francisco, California. South Korean officials threatened stern action Thursday, Oct. 11, 2012, against the retail giant in an increasingly heated row over the US firm’s refusal to shut its wholesale club stores on Sundays. JUSTIN SULLIVAN/GETTY IMAGES/AFP

SEOUL—South Korean officials threatened stern action Thursday against retail giant Costco in an increasingly heated row over the US firm’s refusal to shut its wholesale club stores on Sundays.

Nearly 40 Seoul council officials raided three Costco stores in the capital on Wednesday to crack down on minor parking and safety violations, in apparent reprisal for the retailer’s non-adherence to Sunday closing rules.

Officials said they would conduct “more crackdowns” if Costco opened next Sunday.

In a bid to protect small mom-and-pop stores, the council imposed the Sunday closing rule on big-box discount chains in April.

The chain stores responded with a lawsuit and in June a Seoul administrative court ruled the council’s move illegal, allowing the giant retailers to stay open all week.

As Costco was not a party to the lawsuit, the council argued that it could not benefit from the ruling and slapped a fine of 30 million won ($26,900) on the warehouse chain for opening on Sundays.

“The fine is too meager compared to Costco’s sales,” Kang Hee-Eun, a Seoul city official, told AFP.

“We’ve requested lawmakers to revise the rule to allow far heavier punishment even including sales suspension,” Kang said.

No Costco spokesman was available for comment Thursday, but the company has argued that singling it out for Sunday closure after the court ruling violates “equal protection” principles.

“We should also be allowed to operate our warehouses on Sundays, just like all other large marts,” Costco Wholesale Korea’s country manager Preston Draper said on the firm’s website last month.

Costco is one of a few successful foreign retailers in South Korea where it operates eight members-only stores particularly popular among affluent urban consumers.

Costco enjoyed sales of 2.86 trillion won in 2011, the Chosun Ilbo daily reported, citing accounting reports.