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Photo courtesy of Coupang |
[Alpha Biz= Kim Jisun] The government’s first sanction against Coupang following last year’s personal data breach centers on how the platform leveraged its dominant bargaining position to pressure suppliers in order to protect its own profits.
According to an investigation by Korea’s Fair Trade Commission (FTC), which imposed administrative fines totaling KRW 2.185 billion on Coupang on the 26th, the company set profit-per-margin (PPM) targets of roughly 20–30% with suppliers between January 2020 and October 2022. When suppliers failed to meet those targets, Coupang allegedly forced price cuts or demanded that suppliers shoulder advertising costs. During this process, Coupang buyers reportedly used phone calls or messaging channels that left no records and hinted at halting orders if suppliers refused to comply, effectively leaving them with little room to maneuver.
While the FTC classified the case as one in which the violation amount was “difficult to calculate,” it nonetheless imposed the statutory maximum fixed fine of KRW 500 million per violation. Cho Won-sik, head of the FTC’s Distribution Agency Investigation Division, said, “Coupang attempted to avoid leaving evidence of illegal conduct, making it difficult to quantify the total violation amount, but we secured sufficient evidence regarding the violation process,” adding that the commission responded “strictly by imposing the highest level of fines permitted by law.”
Coupang was also found to have delayed payments for directly purchased goods. The company exceeded the statutory 60-day payment deadline by up to 233 days and failed to pay approximately KRW 850 million in late-payment interest. Coupang argued that the payment period should be calculated from the date when inspection and quality checks were completed after goods entered its warehouses, but the FTC rejected this claim.
The commission clarified that, under the law, the “date of receipt” refers to the actual date on which goods are delivered. This marks the first case in which sanctions were imposed under the provision introduced in 2021 setting payment deadlines for direct purchases.
Some observers describe the latest sanction as merely a “trailer” for a series of investigations surrounding Coupang. The FTC is currently reviewing multiple pending cases involving the company.
Among them are allegations of “most-favored-nation” practices in the food delivery app market—requiring merchants to offer prices equal to or lower than those on competing platforms—and claims of illegal tying by bundling delivery services with Coupang’s Wow Membership. Given Coupang’s dominant market position, the outcomes of these cases could deal a significant blow to its revenue model.
Additional issues include allegations that Coupang improperly used merchant data when launching private-label (PB) products, as well as the recurring controversy over whether Kim Beom-suk, chairman of Coupang Inc., should be designated as the company’s controlling shareholder under Korea’s regulatory framework.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
