KFTC’s Onsite Probe into Coupang’s Alleged Supplier Abuse Collapses... First Since Large-Scale Retail Business Act Enactment

Coupang Files Lawsuit to Revoke Investigation and Requests Suspension of Enforcement
Maximum Fine of 200 Million Won Possible, Depending on Court Decision

The onsite investigation launched by the Fair Trade Commission (KFTC) to look into Coupang’s alleged violation of the Act on Fair Transactions in Large-scale Retail Business was called off after Coupang, the firm under investigation, flatly refused to cooperate. Since the enactment of this law, this marks the first time a company has cited procedural legal grounds to refuse the KFTC’s onsite investigation itself and forced the regulators to withdraw.

According to the distribution industry and the KFTC on the 25th, the KFTC began a ten-day onsite investigation of Coupang, starting from the 19th through the 28th. However, facing Coupang’s strong rejection, the regulators withdrew entirely on the 24th, just four days after the investigation began.

The KFTC reportedly initiated the investigation after receiving allegations that Coupang unfairly shifted the cost of its “price-matching coupon”—a discount coupon issued when Coupang’s prices are higher than those of other online malls—to its suppliers. However, Coupang blocked all four attempts by the KFTC to gain entry to its offices between the 19th and the 24th, citing the Administrative Investigation Basic Act, which requires administrative agencies to provide written notice at least seven days prior to an onsite investigation.

Going a step further, on the 21st, Coupang filed a lawsuit with the court to revoke the onsite investigation order, as well as an application to suspend the enforcement. The KFTC, after confirming official receipt of the case by the court on the 24th, decided to temporarily halt the investigation and withdraw.

The key issue in dispute between the two sides is whether the “advance notice exception” should be recognized. The KFTC argues that, under the Administrative Investigation Basic Act, an exception can be made for proceeding without advance notice if it is determined that fulfilling the investigation’s purpose would be difficult, for example, due to potential destruction of evidence. The commission insists that advance notice can easily lead to concealment of key materials and information leaks, and therefore has routinely conducted unannounced surprise inspections.

The KFTC appears set to take further action as soon as the court rules on Coupang’s application for suspension of enforcement. Should the court dismiss Coupang’s request, the KFTC could impose the maximum fine of 200 million won under the Act on Fair Transactions in Large-scale Retail Business, for interfering with or refusing the investigation without a valid reason.

This content was produced with the assistance of AI translation services.