Coupang’s headquarters in Seoul. (Jung Yong-il/Hankyoreh)
The Korean business world was taken aback by Coupang’s refusal to cooperate with inspectors from the Fair Trade Commission and its decision to take legal action against the FTC. The industry is closely watching to see how the spat could affect regulators’ investigations going forward, as well as companies’ willingness to cooperate.
“Mind-boggling” is how observers described the e-commerce giant’s rejection of the FTC raid, which was part of an investigation into suspected violations of the Act on Fair Transactions in Large Retail Business.
“The thought that we could simply turn down an FTC on-site investigation never even occurred to us. Blocking inspectors amounts to an admission that there’s a lot of evidence to hide,” a source at a large corporation said.
Sources in the business world say that confrontation with any government authorities carries considerable corporate risks. That makes Coupang’s behavior all the more unusual given the FTC’s outsize influence in Korea.
“Companies have previously challenged FTC investigations through administrative lawsuits or other legal proceedings, but physically keeping inspectors off the premises is an entirely different matter,” a source at another company said.
Some think Coupang’s hardball tactics reflect corporate confidence stemming from the company’s lobbying prowess in the US, as well as the trade pressure Washington is currently exerting.
“An ordinary foreign company would never take such an extreme step against Korean regulators unless it had the full support of the US government or some other powerful backer,” a source at a foreign company said.
There are also concerns that Coupang’s showdown with the FTC may set a precedent that could ultimately undermine the government’s ability to regulate the business sector as a whole.
“If other companies start acting like Coupang, it could weaken government agencies’ ability to monitor the market. That’s why there’s so much interest in how this plays out,” another industry source said.
FTC inspectors were trying to determine whether Coupang had unfairly shifted the cost of its “price-matching coupons” onto suppliers, but Coupang refused to allow the inspection on the grounds that the FTC had failed to grant seven days’ notice as required under the Framework Act on Administrative Investigations.
FTC inspectors countered that the law waives the requirement for advance notice when there are concerns about the destruction of evidence, but nevertheless withdrew from the site on Monday.
Coupang has also filed a lawsuit, asking the court to force the FTC to rescind its decision to launch the investigation in the first place.
By Yi Ju-been, staff reporter
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