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Photo courtesy of Yonhap News |
[Alpha Biz= Kim Jisun] South Korea’s Fair Trade Commission (FTC) is reviewing whether to impose hundreds of billions of won in penalties on Coupang over alleged unfair trade practices, including illegal bundling and most-favored-nation (MFN) clauses. The regulator plans to determine the level of sanctions in the first half of next year.
According to competition authorities on the 29th, the FTC has recently completed its investigation into Coupang and is currently collecting the company’s responses before finalizing enforcement measures. Industry sources said the examination report delivered to Coupang in October mentioned the possibility of fines amounting to several hundred billion won.
Two major cases involving Coupang are currently under review. The most closely watched concerns allegations of illegal bundling. Coupang is accused of tying its paid “Wow Membership” service to access to Coupang Play and free delivery via Coupang Eats. Under Korea’s Fair Trade Act, forcing consumers to purchase unwanted additional services is prohibited.
The case draws comparisons to Microsoft, which was fined 32.49 billion won in 2005 for bundling its operating system with application software. Regulators are examining whether Coupang abused its dominant position in e-commerce to steer consumers toward its food delivery and streaming services. After the introduction of free delivery benefits in March last year, monthly active users of Coupang Eats surged nearly 70%, from 6.49 million to 11.01 million within a year. Coupang maintains that the service enhances consumer welfare.
Another major issue involves allegations that Coupang Eats demanded “most-favored-nation” treatment from merchants, effectively preventing them from offering lower prices or better promotions on rival delivery platforms. Authorities allege that Coupang pressured merchants directly or through mechanisms such as its “price parity certification” policy. This practice could restrict competition, particularly for public delivery platforms that offer lower commission rates. Coupang denies making such demands.
Separately, the FTC is also reviewing a case in which Coupang allegedly ignored corrective recommendations issued by the regulator. In October, the FTC ruled that Coupang Eats’ practice of calculating commissions based on pre-discount prices violated the Act on the Regulation of Terms and Conditions and ordered voluntary corrective measures. After Coupang failed to comply within 60 days, the case was escalated to formal enforcement proceedings.
The FTC is also examining potential violations of advertising laws related to the use of the term “free delivery.” Coupang Eats is accused of advertising free delivery while shifting delivery costs to merchants. The company has reportedly told lawmakers it will soon submit a voluntary corrective plan.
Another key issue under review is whether Coupang founder and chairman Bom Kim should be designated as the company’s controlling shareholder. Under Korean law, a “same person” designation applies to individuals or entities that effectively control a corporate group. To date, the FTC has designated Coupang Corporation — rather than Kim — as the controlling entity, citing exceptions under the law.
However, controversy has intensified following revelations that Kim’s younger brother, Yoo-seok Kim, a senior executive at Coupang, received substantial compensation. This has raised questions about whether family members are effectively involved in management. The FTC said it will closely examine the extent of family involvement before making a final determination.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
