Naver, Coupang under probe for suspected antitrust violations

Naver and Coupang are two of the leading companies in South Korea, and it was revealed this week that they are under investigation. Based on the reports, the country's Fair Trade Commission (FTC) launched a probe due to allegations of misleading customers with false advertisements.

According to The Korea Times, the local antitrust watchdog dispatched investigators to the headquarters of Naver and Coupang, located in Bundang district of Seongnam, Gyeonggi Province and Songpa District in southeastern Seoul respectively. The officers were said to have carried out the on-site investigations from Monday night until Tuesday of this week.

Industry observers shared on Wednesday, July 13, that the companies were accused of false advertisements on membership benefits that deceived customers. This allegation was first brought to the regulator's attention in May, and it has expanded since then as more Coupang users filed complaints with the office run by Anti-Corruption & Civil Rights Commission.

A number of users claimed that Coupang indicated in its membership registration that Wow members would be able to purchase goods at lower prices compared to non-members. However, they noticed that there is no difference in the rates when members and non-members shop on Coupang. Thus, the subscription fee they paid for Wow membership seems to be useless.

They alleged that the truth is - Coupang sold items to non-member customers at a lower price compared to Wow members, who are paying a monthly fee of KRW4,990 or $3.82. They said this sales tactic being used on Wow members could also be described as reverse discrimination.

In response to the original complaint in May, the company dismissed the claims by saying, "We provided one-time coupons to new users and those whose accounts remained dormant for some time, in line with our standard promotional activities. The instances mentioned by some are individual isolated cases where different coupons are applied to different users with varying purchase activities and we have not charged Wow members a higher price."

On the other hand, Pulse News reported that Naver is suspected of exaggerating the real cash value of reward points in its Naver-Hyundai Card. The antitrust regulator added that the company may have also inflated the number of its Naver Plus paid subscribers.

Naver allegedly advertised that users could get up to KRW11.4 million or $8,724 cash rewards per month depending on the number of purchases using the Naver-Hyundai Card. In truth, the benefit is only worth up to KRW 200,000 only.