[BizHanKook] “The foundation for normalizing the market is fair and equitable store occupancy. It’s not enough just to open the doors; we need tenants who can enter in a normal, fair, and equitable manner for the business to last long-term without issues.”
Although bidding for the mart at the Mapo Agricultural and Marine Products Market, which has been vacant for a long time, has restarted, merchants expressed concern rather than anticipation for normalization. This is because a new notice was issued shortly after the chairman who led the corporation during past selection controversies returned, and because the rent calculation method and some bidding conditions have changed compared to the past. Merchants are questioning whether the conditions were altered with a specific operator in mind, and they are demanding a fair and transparent selection process.
The Mapo District Facilities Management Corporation ended its contract with Danong Mart, which had operated at the market for about 20 years, in 2020 and began selecting a new operator. This sparked allegations that the then-chairman of the corporation, Mr. A, applied strict regulations to Danong Mart while granting preferential treatment to a newly established company associated with an acquaintance of his. Furthermore, suspicions regarding the corporation's insufficient verification of the company’s financial capacity, discrepancies in business addresses, and illegal sub-leasing spread the controversy to the district council.
Ultimately, the 2020 bidding was canceled in April of this year. Bidding was held in June to select a new operator, but none of the three bidders proceeded to a final contract. With no additional measures appearing as the mart's vacancy dragged on, merchants who suffered sharp declines in customers and revenue began protests in front of the Mapo District Office on August 20, demanding the guarantee of their right to survive. When it was learned that Mr. A, who had previously clashed with the merchants, could return as chairman, the merchants' association expanded their protests and marches to include political circles and the Seoul City Hall.
Amidst the ongoing conflict, the Mapo District Facilities Management Corporation issued a new bid notice on the 2nd to select an operator for the Mapo Agricultural and Marine Products Market mart. However, the merchants are unable to fully welcome the bidding, which has resumed after about four months. They argue that Mr. A has returned as chairman and that the new notice includes conditions that raise questions about fairness.
What the merchants' association finds most problematic is the rent calculation method. The new notice includes a provision for annual reassessment that was not present in the previous one. According to the notice, the contract period is 5 years, but rent is calculated and charged on a yearly basis, reflecting "appraised value, etc." The problem is that specific criteria regarding what factors other than the appraisal are reflected, and the extent of potential adjustments, have not been disclosed.
The merchants' association fears that, without clear criteria, there is room for the rent to be adjusted arbitrarily after the contract is awarded. They argue it could be used to lower rent for a specific operator after they win the bid with a high amount, or conversely, to increase the burden on others. In particular, as there were previous allegations that Mr. A pressured business owners by changing operating regulations during the process of removing Danong Mart, they are wary of the possibility that these calculation criteria could be applied differently depending on the operator.
The follow-up process when a successful bidder abandons the contract has also changed. In the previous notice, if the winning bidder withdrew, the next runner-up was selected; this time, a new bid must be issued. The merchants' association takes issue with the fact that in this case, even if there is a runner-up from the initial bid, the selection process returns to square one. They question whether the bidding will be repeated until a desired operator is selected if bid abandonments keep occurring.
The association also questions the fact that while the potential for discretionary intervention in the bidding process has increased, the burden on the operator after winning the bid has been eased. The cost of drafting a pre-litigation settlement agreement, previously borne entirely by the winner, has been changed to be split between the corporation and the tenant, and some specific facility investment obligations, such as facility demolition and remodeling, have been removed from the existing notice.
Above all, the fact that the notice was issued only a week after Mr. A—a central figure in past allegations—returned as chairman is fueling the merchants' suspicions. In a statement on the 10th, the merchants' association demanded transparency regarding the process of changing bidding conditions and the rent calculation criteria. They also stated they would continue their protest marches unless clear measures for market normalization are presented.
The Mapo District, which has the authority to appoint the chairman, stated that while it is aware of the merchants' association’s opposition to Mr. A’s reappointment, there were no issues in the selection process. According to the Local Public Enterprises Act, the head of a local government appoints the head of a local public enterprise from among candidates recommended by an executive recommendation committee. A Mapo District official stated, “The final candidates for the Mapo District Facilities Management Corporation chairman were selected through public recruitment and evaluation by the executive recommendation committee, and the district decided to respect the committee’s decision.” They specifically drew a line against the allegations, saying, “No one’s intentions were reflected in the final selection process of the chairman.”
Regarding the rent calculation method that the merchants are concerned about, they explained, “When calculating rent, the relationship with the initial winning bid amount, applicable laws/regulations, and contract conditions must be reviewed together, and specific calculation criteria must comply with these,” adding, “This does not mean that rent will be arbitrarily lowered based solely on the request or management situation of a specific operator.”
The Mapo District Facilities Management Corporation announced that it plans to continuously communicate with the merchants' association and promote support measures. They intend to hold joint promotional and refund events for the entire market in connection with the mart's opening, and push for public interest/cultural events to attract foot traffic and support for non-face-to-face/online grocery sales channels. They also stated that together with Mapo District, they are promoting a "Market Normalization Plan" centered on two pillars: normalizing key customer-attracting facilities and strengthening the competitiveness of the on/offline commercial area.