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Forcing convenience stores to open 24 hours may break monopoly laws: Japan FTC

A sign reading "open 24 hours a day, 365 days a year" is seen on the glass storefront of a convenience store, in this unrelated file photo taken in Himeji, Hyogo Prefecture, on July 1, 2019. (Mainichi/Toshihiro Hamamoto)

TOKYO -- Forcing convenience store franchisees to stay open 24 hours a day could be a contravention of laws against private monopolization, according to a report of findings from a survey by the Japan Fair Trade Commission (JFTC) published on Sept. 2.

    The JFTC pointed out in its summation that there are cases in which stores are not receiving cooperation from their head offices to reduce working hours from the all-day model. It also said that pushing the businesses to stay open could constitute a violation of passages against making use of one's superior bargaining position in the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade, and that in light of that urged Japan's eight major convenience store firms to improve their practices.

    In the part of the survey which asked franchisee owners about 24-hour operations, just 33.2% of respondents said they wished to continue with such hours. The other 66.8% said they wanted to try either temporary or full reductions in hours, or that they wished to do a trial of shorter business hours. Additionally, 8.7% said that their head office failed to respond to negotiations over the potential changes.

    On the subject of products, 51.1% of store owners reported "stocking products against their will after being strongly recommended to by the franchise." More than 40% also said they had experienced being forced to stock more products than necessary, or had head office employees ordering goods to their stores without permission. When stocks remain unsold, the cost burden on franchisees increases, and the survey makes it apparent that many stores have been pushed into taking responsibility for goods they were reluctant to take.

    The JFTC concluded by writing that both forcing franchisees to remain open all hours and to take on unwanted stock are acts equivalent to violations of laws against private monopolization, and called on the eight major convenience store companies to review and improve their business practices in time to submit reports to the commission by the end of November. Additionally, it said that in spring 2021 it will revise its guidelines for operation as a franchise, and newly put in writing its positions on issues including opening 24 hours.

    The survey was conducted between October 2019 and August 2020, and aimed to gain responses from 31,107 convenience store owners of 57,524 shops affiliated with the eight major convenience store companies and the Japan Franchise Association. Of them, 8,423 owners filled out the survey.

    (Japanese original by Takashi Narumi, Business News Department)

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