Coupang slapped with $2.8M fine by Korea’s FTC over unfair business practices

Coupang, the South Korean e-commerce company, was slapped with a heavy fine by the Korea Fair Trade Commission (KFTC). It was reported that it was ordered to pay ₩3.29 billion or around $2.81 million over its alleged unfair business practices.

It was added that the country’s anti-trust regulator also accused Coupang of interfering in the business of vendors. According to The Korea Times, The KFTC stated it discovered that the Seoul-based company forced hundreds of sellers to follow its illegal sales and marketing regulations from early 2017 to September 2020.

It was said that such policies were put in place so it can maintain its competitive lead over its rivals and other online retailers. The battle for market dominance is raging and it was suggested the unlawful rules helped Coupang gain the upper hand in the market.

Based on the report, the companies that were affected by the unfair policies are Yuhan Kimberly, Namyang Dairy Products, LG Household & Health Care, Maeil Dairies, and Cuchen. KFTC launched the investigation on Coupang in 2019 after LG Group’s LG Household & Health Care lodged a complaint against the e-commerce platform.

It was explained by the antitrust regulator that Coupang’s mistake was urging its suppliers to increase the sale prices of their goods that are sold in the company’s rival online malls. In this way, Coupang will be able to offer the products at cheaper rates and of course, customers will flock to the site.

The e-commerce giant was also said to have requested its suppliers for wholesale rebates without stating any terms related to rebate programs. From January 2017 to June 2019, it was said that Coupang collected ₩10.4 billion from about 330 suppliers.

"The case is noteworthy as it illustrates that an online retailer is now in a predominant position over large companies as well as manufacturers of popular goods," Cho Hong Sun, a KTFC official, said at a press briefing.

Meanwhile, The Korea Herald reported that Coupang violated a few of the Fair Trade Act and the Act on Fair Transactions in Large Retail Business so it was fined. The agency also ordered the company to take corrective measures. In response to the allegations, Coupang reportedly expressed regret over the FTC’s decision and denied its predominant stance over the major companies during the investigation.