"Excessive": Coupang Blocks Korea Fair Trade Commission Investigation with Cancellation Lawsuit... Years of Conflict Explode

E-commerce giant Coupang's move to block the Korea Fair Trade Commission's on-site inspection by filing a cancellation lawsuit has escalated into an unprecedented situation, interpreted as the result of long-simmering conflicts finally exploding. This stands in stark contrast to strategies adopted by other domestic companies that actively cooperate with various government regulatory inspections—including those by the Korea Fair Trade Commission and National Tax Service—to minimize related risks.

According to relevant industry sources on the 27th, Coupang filed a cancellation lawsuit with the court on the 21st requesting an order to halt the enforcement of the Korea Fair Trade Commission's on-site inspection. Prior to this, between the 19th and 21st, when Korea Fair Trade Commission staff attempted to conduct unannounced on-site inspections at Coupang's headquarters, the company refused and immediately filed a request with the court to prohibit the administrative disposition.

Coupang maintains that the Korea Fair Trade Commission failed to comply with regulations requiring seven days' prior notice before conducting an on-site inspection under current law. The company argues that since the investigation pertains not to the Fair Trade Act or Subcontracting Act but to the Large-Scale Retail Business Act, it does not fall under exceptions for prior notice, rendering the procedure unlawful.

In response, the Korea Fair Trade Commission counters that the Large-Scale Retail Business Act applies provisions related to Fair Trade Act investigations and that an exception to prior notice was applied due to concerns over evidence destruction by Coupang. Ju Byeong-gi Gong Jeong-geo-rae (Chairman) announced a tough stance during yesterday's National Assembly Budget Special Committee meeting, stating, "We intend to report Coupang's refusal of the investigation."

Inside Coupang, reactions have been along the lines of "what was going to happen has finally happened." This is because since last year's data breach incident, when a joint government investigative team resided at the headquarters for several months, the Korea Fair Trade Commission staff also formed a large-scale team and conducted intensive inspections during which a significant amount of data had already been submitted. In fact, during this period, the Korea Fair Trade Commission investigation team conducted over 100 interviews with Coupang employees and reportedly requested hundreds of documents not only related to the data breach incident but also for investigations under the Fair Trade Act and Large-Scale Retail Business Act.

Prior to this, the Korea Fair Trade Commission had repeatedly conducted intensive inspections on Coupang and imposed substantial penalties, leading to ongoing legal disputes—a factor cited as contributing to the intensification of emotional tensions between both sides.

In February this year, the Korea Fair Trade Commission imposed a penalty of 21.85 billion won on Coupang for allegedly forcing price reductions and advertising expenditures from suppliers. In response, Coupang filed an administrative lawsuit. Additionally, in August 2021, when the Korea Fair Trade Commission imposed a penalty of 32.97 billion won on Coupang for allegedly demanding price increases from supplier companies including LG Household & Health Care, Coupang contested the penalty and filed an administrative lawsuit, resulting in a court ruling in Coupang's favor in February 2024 that canceled the penalty imposition.

Alongside this, an administrative lawsuit is ongoing regarding the Korea Fair Trade Commission's imposition of a penalty exceeding 160 billion won last year for manipulating search rankings of PB (private brand) products. Furthermore, the case involving Coupang Eats demanding preferential treatment from delivery app operators is approaching Korea Fair Trade Commission sanctions, with expected penalties in the hundreds of billions of won.

Even considering risks associated with Coupang's rapid growth in a short period, the company's internal atmosphere holds that the Korea Fair Trade Commission's successive sanction measures and relentless attempts at on-site inspections are excessive compared to cases involving other companies. In fact, Coupang Inc., the U.S. parent company, presented arguments of this nature during U.S. congressional hearings, escalating the issue into a diplomatic conflict between the two countries.

With deepening emotional rifts between both sides, the ruling party has decided to push for an amendment to the Administrative Investigation Basic Act that would add five laws—including the Large-Scale Retail Business Act, Agency Law, and Consumer Basic Act—as exceptions to the "prior notice" requirement. This move aims to pressure Coupang while bolstering the Korea Fair Trade Commission's actions.