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Coupang slapped with W3.3b fine for unfair trade practices

Cho Hong-sun, head of the KFTC Seoul office, speaks duing an offline brief held at Government Complex Sejong, Thursday. (Yonhap)
Cho Hong-sun, head of the KFTC Seoul office, speaks duing an offline brief held at Government Complex Sejong, Thursday. (Yonhap)

Coupang on Thursday has been slapped with fines totaling 3.29 billion won ($2.8 million) for unfair business practices, losing a case which pitted decades-old consumer goods brands against the e-commerce platform operator.

The Fair Trade Commission, in announcing the decision, said Coupang has abused its position as a major online marketplace to coerce vendors, including LG Household and Healthcare, to slash the prices of products sold on its platform.

Coupang violated several terms of the Fair Trade Act and the Act on Fair Transactions in Large Retail Business between 2017 and 2020, the watchdog said. Along with the fines, the agency ordered Coupang to take corrective measures.

According to the antitrust watchdog’s briefing on Thursday, the company forced suppliers to make their cheapest offers on its platform and higher-priced offers on other e-commerce sites. It has actively monitored and intervened to slash prices of around 360 items, provided by 101 outside suppliers.

Coupang is also found to have coerced suppliers into purchasing advertisements. Under pressure, a total of 128 suppliers placed 397 advertisement deals with Coupang between March 2017 and July 2019.

Between 2018 and 2019, Coupang has forced its suppliers to shoulder all expenses from sales promotions, despite a local law that stipulates that suppliers don’t have to burden promotional expenses over 50 percent. A total of 388 suppliers, including some duplicates, have paid 5.7 billion won to Coupang, according to the FTC.

Coupang was also found to have requested wholesale rebates from suppliers as well, without specifying any terms relating to rebate programs. Between January 2017 and June 2019, Coupang has received 10.4 billion won from 330 suppliers.

The antitrust watchdog’s probe into Coupang began in 2019, after LG Household & Health Care filed a complaint against the firm’s unfair trade practices.

The FTC said the latest sanction is the first case that has addressed unfair trade practices between an e-commerce operator and large-sized suppliers. It added it will continue to monitor unfair trade activities in the e-commerce sector, given that more than 70 percent of South Korea’s population now uses online shopping platforms.

By Shim Woo-hyun (ws@heraldcorp.com)
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