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South Korea's fair trade watchdog has approved voluntary corrective measures proposed by Coupang Corp. and its private-label affiliate, resolving a case involving unfair dealings with subcontractors. The decision, announced on Tuesday, comes as the same companies face separate scrutiny over alleged abuse of market dominance in the food delivery sector.

Coverage Comparison

The approval, reported by Yonhap News, covers Coupang and its wholly owned subsidiary, Coupang Private Label Brands (CPLB). According to the Fair Trade Commission's probe, the two companies had provided 314 subcontractors with contracts that omitted legally required information and lowered supply prices for 94 subcontractors through discount promotions not stipulated in their agreements since 2022.

The FTC approved corrective measures worth 3 billion won (US$1.94 million), which Coupang and CPLB had proposed in March of last year. The amount is significantly higher than the anticipated fines of 600 million won to 1.1 billion won.

Key Claims

  • The FTC approved corrective measures worth 3 billion won proposed by Coupang and its private-label affiliate.
  • Coupang and CPLB were accused of unfair dealings with subcontractors, including omitting legally required information from contracts and lowering supply prices through non-stipulated discount promotions.
  • Coupang pledged to provide 1.05 billion won to support subcontractors' costs related to product development, manufacturing, and logistics.
  • Coupang plans to spend 1 billion won on advertising private-label products through its website and mobile application.
  • Other programs include 450 million won to help subcontractors promote private-label products at offline exhibitions and 400 million won for consulting services and overseas market development.
  • Coupang will also hold regular meetings with subcontractors to discuss cooperation on quality improvement and workplace safety.
  • In a separate case, the FTC last week rejected voluntary corrective measures proposed by Coupang, worth 60 billion won, over allegations of market dominance abuse against restaurant owners and consumers.
In the rejected case, the FTC also turned down proposals from Woowa Brothers Corp., which operates the food delivery platform Baedal Minjok (Baemin). Woowa Brothers had proposed lowering commission fees for restaurants and providing support measures worth 300 billion won over three years. Coupang, which operates Coupang Eats, proposed investing 60 billion won over four years to financially support restaurants. The FTC ruled that these proposals did not meet the requirements for initiating consent decree procedures, noting that a significant number of restaurants and consumers were affected.

The FTC's investigation found that the platforms had unfairly required restaurant operators to grant them "most-favored" treatment, excluding those who failed to comply from membership-linked programs offering benefits such as free delivery. The watchdog also found that Woowa Brothers gave preferential exposure to restaurants using its affiliated delivery riders, effectively pressuring restaurant operators to use its services, and that Baemin engaged in deceptive advertising by portraying its direct delivery service as faster than competing options.