#According to a public disclosure report filed by Coupang Inc. with the U.S. Securities and Exchange Commission (SEC), Coupang paid off the 121st million dollars (approximately 162.8 billion won) in fines imposed by the Korea Fair Trade Commission in June 2024 this past June. Even Coupang, a major retailer with sales exceeding 50 trillion won, had to pay in six installments over two years just to survive, meaning 'punitive fines' have already become a reality.
The might of the Korea Fair Trade Commission, dubbed the 'grim reaper of the business community,' is formidable. Based on confidential data obtained during surprise inspections conducted without warrants, it issues corrective orders and imposes massive fines; there are almost no companies that can withstand such measures. Even if there are flaws in the Korea Fair Trade Commission's logic or a desire to present counterarguments, it has become customary for companies not to take a stance due to fears of 'follow-up sanctions.'
Coupang, which introduced the Rocket Delivery service in 2014 and reshaped the distribution industry landscape, was once a symbol of innovation. Through its 'planned deficit' strategy, investing 10 trillion won in domestic logistics networks, it has become a national platform used by 32 million customers monthly. However, over recent years, Coupang has become a concentrated target of regulation by government regulatory institutional investors, including the Korea Fair Trade Commission, leading to the spread of negative images such as 'monopoly' and 'illegality.'
In June 2024, the Korea Fair Trade Commission imposed a fine in the range of 140 billion won (provisional; final amount: 121 million dollars) on Coupang for allegations of manipulating algorithms to promote sales of PB (private brand) products and referred the case to the Prosecution Service. This was the largest fine ever imposed by the Korea Fair Trade Commission on a single retailer.
The Korea Fair Trade Commission viewed that Coupang manipulated its algorithm to display PB products at the top of platform search rankings and mobilized employees to write purchase reviews, constituting 'illegal acts that hinder fair competition.' Coupang refutes this logic for such sanctions. The company argues that PB products like bottled water, toilet paper, and wet wipes displayed at the top of the app for extended periods were not manipulated by algorithms but were chosen by customers who value cost-performance due to their prices being half that of general manufacturers.
Industry observers believe that depending on the outcome of this case, currently in its second-instance trial, a major revision of the 'product display' strategies of online and offline retailers operating domestically will be unavoidable. An industry official stated, "Amazon, Walmart, and Costco in the U.S. conduct product displays without restrictions in both online and offline spaces," adding, "Reducing PB product exposure harms customers as well."
Large-scale fines also deal a significant blow to capital management. Coupang, which paid off a fine in the range of 160 billion won within two years, must now pay another fine in the range of 620 billion won imposed by the Personal Information Protection Commission for a data breach incident last June. Given its financial capacity, installment payments appear unavoidable again this time as well. Concerns are raised that this will lead to a contraction in follow-up logistics center investments and a subsequent decline in local employment.
Even if Coupang wins the lawsuit, losses are inevitable. Even if the fines are returned, it will be difficult to repair the damage to corporate image and the decline in corporate valuation that occurred over the 3rd–5 year litigation period. Coupang's market capitalization, which exceeded 50 trillion dollars at the end of last year, has recently plummeted to around 27 billion dollars as massive fines, successive regulations, and sanction risks were factored in.
Not only Coupang but also major domestic retailers such as Lotte and Shinsegae have previously received sanctions from the Korea Fair Trade Commission due to allegations of funneling orders to affiliates or bullying suppliers, leading to legal disputes lasting 3–5 years. While there are cases where they successfully appealed these decisions, the Korea Fair Trade Commission has taken no particular stance. Restoring damaged images is solely the responsibility of the companies.
Experts advise that institutional improvements are necessary. Lee Byeong-tae, an emeritus professor at KAIST Graduate School of Business, stated, "The Korea Fair Trade Commission monopolizes investigation, prosecution (preparation of review reports), and deliberation (first-instance verdicts and penalties) within a single administrative institutional investor," adding, "The number of cases handled by the Korea Fair Trade Commission from 2015 to 2020 was 6,910. Compared to 230 cases in the U.S., 65 in the EU, and 140 in Japan during the same period, this represents excessive intervention."
The professor pointed out, "The recent event where a Korea Fair Trade Commission on-site inspection was refused at Coupang's headquarters and thus failed is resistance against the coerciveness of administrative inspections without judicial warrants from courts and procedural legitimacy. It exposes the limitations of an abnormal system where an institutional investor monopolizes the roles of prosecutors and judges."
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