 |
Photo provided by Coupang. |
[Alpha Biz= Paul Lee] Coupang has come under scrutiny for pressuring subcontractors to lower supply prices for its private brand (PB) products. In response to a Fair Trade Commission (FTC) probe, the company has voluntarily submitted a corrective action plan.
According to the FTC on the 10th, it has decided to initiate a consent order procedure for Coupang and its subsidiary CPLB, which was spun off in 2020 to handle PB product manufacturing and sales. This marks the first time such a process has been launched in relation to subcontract payment issues.
From 2019 to 2022, Coupang and CPLB allegedly forced 94 subcontractors to reduce supply prices in order to run promotional events on its platform. These unilateral demands were made without prior consultation and were deemed unfair transactions. The FTC also found that purchase orders sent to suppliers lacked signatures or seals, raising legal validity concerns.
Coupang has pledged measures to prevent recurrence. The company committed to holding prior consultations with suppliers before PB product promotions, covering at least 50% of related costs, and specifying minimum order quantities and lead times in contracts. It also announced plans to establish a 3 billion won ($22 million) fund to support affected suppliers and create a regular consultative body to address subcontractor concerns.
The FTC will review the proposed corrective measures, seek feedback from stakeholders, and make a final decision on whether to approve the consent order.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
