Coupang standoff: Seoul regulators withdraw from probe as e-commerce giant refuses cooperation

South Korea's Fair Trade Commission (KFTC) has unprecedentedly withdrawn from an on-site investigation into e-commerce giant Coupang after the company refused to cooperate, marking a significant escalation in the regulatory standoff.

The KFTC launched an on-site probe on August 19, focusing on allegations that Coupang violated the Large-Scale Distribution Business Act. The investigation aimed to determine if Coupang had unfairly passed on the costs associated with its 'price-matching coupons' to its suppliers. These coupons automatically offer discounts to consumers if a product is found to be cheaper on competing platforms like Naver, ensuring Coupang's prices remain competitive.

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There have been cases where companies refused to submit data or blocked entry during investigations, but this is the first time a company has completely refused an investigation by questioning the law itself.

Coupang, however, rejected the KFTC's investigators, citing the Administrative Investigations Act. The company argued that the KFTC failed to adhere to proper notification procedures, which typically require at least seven days' written notice before an investigation begins. While the KFTC acknowledged this requirement, it pointed to an exception clause allowing for immediate investigations when there is a risk of evidence destruction or collusion.

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The confidence behind Coupang's defiance of the KFTC is naturally the United States. It means they are drawing a line with the Korean government.

This marks the first instance where a company's outright refusal to participate in an investigation, based on a challenge to the legality of the process itself, has forced the KFTC to withdraw. Previously, companies had obstructed investigations by refusing to submit documents or blocking entry, but a complete rejection of the legal basis for the probe is considered unprecedented.

Coupang has since filed lawsuits against the KFTC's investigation decision and requested an injunction to halt the process, seeking a judicial review of the KFTC's actions. The KFTC, in turn, is considering imposing fines on Coupang for obstructing the investigation. Industry observers suggest Coupang's defiant stance may be emboldened by perceived support from the United States, signaling a potential shift in its relationship with South Korean regulators.

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We plan to receive a court ruling on the KFTC's failure to comply with procedures.