Coupang, South Korea’s leading e-commerce company, filed an administrative lawsuit against the Korea Fair Trade Commission (KFTC) to challenge a penalty and corrective order issued by the regulatory body for alleged unfair trade practices.
The legal dispute stems from a KFTC ruling in February. The KFTC fined Coupang for listing prices on purchase orders that differed from the actual prices paid to subcontractors that manufacture its private brand (PB) products. Coupang has challenged this decision, marking another episode in the series of legal disputes with the KFTC.
Coupang took legal action against the KFTC by filing an administrative lawsuit at the Seoul High Court last month, according to people familiar with the matter on April 11. The case was assigned to the 6-2 Administrative Division of the Seoul High Court. A trial date for the case has yet to be set.
Under the Fair Trade Act, the Seoul High Court has jurisdiction over appeals against antitrust decisions made by the KFTC, including the imposition of fines. The Seoul High Court and the Supreme Court operate in a two-tier system, with the KFTC’s rulings effectively recognized as the first instance.
The KFTC issued a corrective order and imposed a fine of 178 million won on Coupang and its affiliate CPLB, which is in charge of the private label business, for violating the Subcontracting Act in February.
The KFTC’s investigation revealed that between March 2019 and January 2022, Coupang entrusted the production of 31,405 PB items to 218 subcontractors while issuing purchase orders that listed subcontracting unit prices that differed from actual subcontracting prices. The total value of these orders reached approximately 113.4 billion won. Under the Subcontracting Act, a purchase order is deemed non-existent if it documents facts that differ from actual transaction details.
Coupang argued that it had paid the actual purchase price as stated in the written quotations, but the KFTC dismissed this claim. The KFTC’s rationale was that a quotation merely represents the supplier’s one-sided intention, whereas a purchase order is acknowledged as a legally binding document equivalent to a contract.
Coupang appointed law firm Lee & Ko as its legal representative. During the trial, Coupang is likely to argue that the prices listed on the purchase orders were agreed upon temporarily to prevent the disclosure of product unit price information, which is a core competitive advantage for the suppliers.
This is not the first legal dispute between Coupang and the KFTC. In February this year, Coupang won a case against the KFTC, which had imposed a 3.297 billion won fine on the company in August 2021 for unfair practices against suppliers.
