Coupang Eats CI. Photo courtesy of Coupang Eats
South Korea’s Fair Trade Commission (FTC) is expected to bring two alleged antitrust violation cases targeting Coupang’s core business model to its plenary session next month for review. Both cases involve potential fines in the range of 100 billion won ($73 million), drawing attention to the plenary session’s decision.
According to industry sources on Tuesday, the FTC is coordinating the plenary session schedule for two cases: allegations of “membership bundling” by Coupang and a “most-favored-nation treatment” case involving Coupang Eats’ demands on partner merchants. Examination reports have already been delivered to Coupang in both cases, and Coupang has submitted its written opinions, leaving only the deliberation stage.
The key issue is whether Coupang’s method of bundling other services, such as video streaming and food delivery, around its paid “WOW Membership” restricted market competition. In the Coupang Eats case, the central question is whether the company demanded favorable trading conditions from partner merchants, amounting to so-called “platform abuse.”
If the FTC deems Coupang a market-dominant operator and finds abuse of that position, fines of up to 6 percent of related revenue can be imposed. Given the scale of both cases, industry observers see a strong possibility that each could result in fines of around 100 billion won.
There is a variable, however. The FTC may opt for a consent decree procedure instead of a plenary session. Under a consent decree, a company presents voluntary corrective measures and victim relief plans, allowing the case to be closed without a ruling on illegality. Google previously closed a case through a consent decree with the FTC. In the case involving allegations that Google restricted competition in the app market, the FTC accepted approximately 30 billion won in cooperative support measures proposed by Google and closed the case without determining illegality.
Coupang is currently negotiating cooperative measures with the FTC and has expressed its intention to participate in a “social dialogue body” being pushed by the National Assembly. However, discussions have yet to gain momentum. A National Assembly official said, “Dialogue bodies for delivery apps and parcel delivery are each operating, but Coupang’s participation has not been active, leaving negotiations stalled.” An FTC official also said, “Coupang expressed its intention to file a supplementary application for a consent decree, but it has been stalled since then,” adding, “As far as we know, there has been no progress.”
