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(LEAD) Lotte wins suit against Shinsegae over Incheon store biz

2017/11/14 14:32

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(ATTN: ADDS more info, reaction from companies in paras 4-6, 8-10)

SEOUL, Nov. 14 (Yonhap) -- South Korean retail giant Lotte won a suit against its rival Shinsegae on Tuesday over business rights to run a department store west of Seoul, ending a long legal battle between the two conglomerates that began five years ago.

The Supreme Court ruled in line with the original verdict that validated Lotte's acquisition of land in Incheon from the Incheon city government in 2012.

The battle between the two rivals began in 2012, when Lotte signed a 900 billion won (US$836.4 million) deal with Incheon city to take over its 77,800 square meter transit terminal in which Shinsegae has been running its department store for the past two decades.

It is Shinsegae's fourth-largest department store in the country with an annual revenue of over 800 billion won.

Shinsegae's original lease contract with Incheon city ends this year, but it has signed a separate rental agreement with the city for part of the outlet it extended in 2011 and cost the firm 145 billion won. The lease for the extended area, which accounts for 27 percent of the total store, is valid until 2031.

Shinsegae has accused Lotte and the city government of infringing on its lease rights and putting its business in jeopardy, claiming that if Lotte takes over the land ownership, it will be impossible for the company to continue running the branch, as the rest of the complex will be filled with Lotte stores.

But the previous court rulings dismissed Shinsegae's argument, saying that Lotte's takeover does not legally forbid Shinsegae from maintaining its full operations on the site. It also did not accept its claim that Incheon city gave Lotte special consideration when securing the land ownership.

Lotte has been demanding Shinsegae pull its businesses from the site by Sunday, the expiration date of the original contract between Shinsegae and Incheon city. But Shinsegae has been rejecting such a demand, saying it cannot withdraw its business until the top court delivers a ruling.

Lotte plans to build a "Lotte Town" in the area, comprised of a department store, cinema and apartment complex under its name. The company said it is planning to take over brands operated under Shinsegae for the job security of the subcontractors.

Industry watchers say it is practically impossible for two different department stores to operate in one building, expecting the companies to find a middle ground in the near future.

This file photo, dated Sept. 27, 2012, captures the Shinsegae Department Store located at Incheon bus terminal. (Yonhap) This file photo, dated Sept. 27, 2012, captures the Shinsegae Department Store located at Incheon bus terminal. (Yonhap)

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