Coupang Sues Korean Antitrust Regulator Over Surprise Inspection

The e-commerce company filed a lawsuit seeking to overturn the Korea Fair Trade Commission’s authorization of the inspection and separately requested an injunction to stop the probe, according to the Korea JoongAng Daily. The dispute centers on allegations that Coupang may have transferred costs associated with price-matching discounts to suppliers.

According to the Korea JoongAng Daily, KFTC investigators tried four times to begin inspections at Coupang between Aug. 19 and Monday but left without carrying them out after the company objected. The publication reported that an outright refusal of an KFTC inspection by a company is unprecedented since the commission’s establishment.

The confrontation prompted KFTC Chairman Ju Biung-ghi to say the regulator would pursue criminal charges following the unsuccessful inspection attempt Wednesday, the newspaper reported.

At the center of the investigation are Coupang’s price-matching coupons. The company automatically offers the discounts when an item on its platform costs more than the same product on a rival marketplace, effectively lowering the customer’s price toward the cheapest available offer, according to the Korea JoongAng Daily. Regulators are examining whether Coupang made suppliers absorb the cost of those discounts.

Coupang’s challenge, however, focuses on how the KFTC sought to conduct the investigation rather than the underlying allegations.

The company argues that investigators failed to comply with a provision of South Korea’s Framework Act on Administrative Investigations that generally requires authorities to provide written notice at least seven days before an on-site inspection, the Korea JoongAng Daily reported.

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Coupang said in a Tuesday statement cited by the newspaper that advance notification is a legal safeguard protecting the rights of parties subject to investigations and that it intends to seek a judicial determination over the KFTC’s handling of the procedure.

The law includes an exception, however. Authorities can provide notice when an investigation begins if they believe advance warning could frustrate the inquiry, including because evidence might be destroyed. The KFTC maintains that this exception justified its approach in the Coupang case, while the company disputes that the circumstances meet that threshold, according to the Korea JoongAng Daily.

Coupang has also pointed to its cooperation with other lengthy government inspections since January following a major personal-data breach as evidence against concerns that it would destroy material relevant to an investigation, the newspaper reported.

The disagreement could have implications extending beyond Coupang. An industry source cited by the Korea JoongAng Daily said a court ruling in the company’s favor could disrupt the KFTC’s established approach to unannounced inspections and encourage other businesses to assert similar procedural objections when regulators arrive without advance notice.

The clash is also drawing political attention. South Korea’s governing Democratic Party criticized Coupang’s resistance to the investigation, arguing that companies operating in the country must comply with Korean law. Party spokesperson Lee Yong-woo accused Coupang of invoking concerns in the United States about discriminatory treatment of American companies when facing domestic scrutiny, according to the newspaper.

The immediate question now moves to the courts, which will determine whether the KFTC followed the required procedures and whether Coupang can block the inspection while its legal challenge proceeds.

The dispute puts one of South Korea’s largest e-commerce businesses in a potentially consequential legal fight with the country’s competition watchdog — one whose outcome could influence how aggressively regulators can conduct surprise inspections in future corporate investigations.

Source: The Korea JoongAng Daily