KFTC Enraged by Coupang's Refusal to Cooperate with Investigation

Coupang's outright refusal to allow an on-site investigation by the Korea Fair Trade Commission (KFTC) into alleged violations of the Large-Scale Distribution Business Act has sent shockwaves through the regulatory body and the industry. This unprecedented move by the e-commerce giant marks the first instance of a company completely blocking a KFTC investigation, leading to strong reactions from officials and competitors alike.

Sources within the KFTC described the situation as "unprecedented" and "difficult to find a precedent" for an investigation being halted before it could even begin. Officials expressed frustration and anger, with one stating, "Coupang has been particularly uncooperative during past on-site investigations, often delaying document submission. This time, they outright refused the investigation itself, leaving many within the KFTC bewildered and indignant." KFTC Chairperson Joo Byung-ki vowed to "thoroughly deal with this unprecedented situation" and "mobilize all available means."

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An unprecedented situation has occurred, and we intend to deal with it thoroughly. I believe we must mobilize all available means.

Industry insiders echoed the KFTC's surprise, with one executive from a major conglomerate calling Coupang's stance "unimaginable." The decision to confront the KFTC, an influential regulatory body, is seen as particularly bold, especially considering the potential repercussions for a company operating within South Korea. The prevailing analysis suggests Coupang's confidence stems from perceived backing from the U.S. government and its lobbying power. A representative from a foreign-invested company noted that such an extreme measure would be unlikely without substantial support from the U.S.

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We have never even considered refusing an on-site investigation by the Fair Trade Commission.

The KFTC attempted to investigate Coupang for allegedly unfairly passing on the costs of 'price-customized coupon' discounts to suppliers. However, Coupang refused, citing the KFTC's failure to provide the legally required seven-day advance notice for administrative investigations. The KFTC countered that the exception allowing investigations without prior notice in cases of evidence destruction applied. The commission ultimately withdrew from the site on August 24, and Coupang has since filed a lawsuit seeking to nullify the KFTC's direct investigation decision.

In response to Coupang's actions, political circles are considering legislative changes to prevent similar occurrences. Lee Kang-il, a member of the Democratic Party, is reportedly preparing an amendment to exclude investigations related to violations of the Large-Scale Distribution Business Act and the Agency Law from the scope of the Administrative Investigations Act. Currently, certain laws overseen by the KFTC are explicitly excluded, but this proposed amendment would broaden that exclusion.

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Without the full support of the U.S. government or strong backing, a typical foreign company cannot take such extreme measures against South Korean regulatory authorities.