Coupang and KFTC Clash in Court Over Designating Bom Kim as Group Owner... "A Flawed Decision" vs. "Administrative Discretion Should Be Respected"

[Financial News] Coupang and the Korea Fair Trade Commission (KFTC) clashed head-on in court over the commission's decision to designate Bom Kim, chairman of Coupang, Inc.'s board, as the same person in control of the company. Coupang argued that the decision was "seriously flawed in both procedure and substance" and should be suspended immediately, while the KFTC countered that the designation is within the administrative authority's discretion and should be respected.
Seoul High Court Administrative Division 7, presided over by Judge Kwon Soon-hyung, held a hearing on the afternoon of the 16th on Coupang's request to suspend the enforcement of the KFTC's decision to change the designation of the controlling person.
Coupang said both the substance and the procedure of the designation change were seriously problematic. If the controlling person is designated as an individual rather than a corporation, that person must disclose the shareholdings of themselves, their spouse, and relatives in domestic and overseas affiliates.
A lawyer for Coupang said, "This decision has procedural and substantive defects," adding, "The KFTC failed to follow the procedures it set itself and the basic principles of the Administrative Procedures Act." In particular, the company pointed out that although the KFTC had designated a corporation as the controlling person from 2021 through 2025, it did not provide sufficient opportunity to submit opinions or explain its position during the change process.
Coupang also argued that the disclosure and reporting obligations that Bom Kim would have to bear after the change were excessive. A lawyer for Coupang said, "If the controlling person is changed to Chairman Kim, the scope of reporting and disclosure obligations, which have nothing to do with the actual need for regulation, will be expanded far too much," adding, "If such information is not submitted, the risk of criminal punishment for false submission or refusal to submit becomes real."
The KFTC, however, argued that the designation of a controlling person is a core part of the regulatory framework for large business groups aimed at preventing economic concentration, and that the agency's judgment should be respected.
A KFTC lawyer said, "The large business group system was introduced to prevent economic concentration, and designating a natural person is the legal principle," adding, "As for who the controlling person should be, broad discretion is granted to the agency, and unless there is a serious legal violation, that judgment should be respected."
The KFTC also said the disadvantages claimed by Coupang were exaggerated. "Based on the materials submitted so far, the only additional items are large business group affiliates in which a natural person and relatives hold a certain percentage or more," the commission said. "It is not reasonable to claim that this makes compliance impossible or excessively burdensome."
On April 29, the KFTC changed Coupang's controlling person designation from the existing corporation to Bom Kim during the process of designating the company as one of the 'Business Groups Subject to Disclosure' for 2026. Coupang's U.S. entity, Coupang, Inc., in which Chairman Kim and others hold shares, serves as the headquarters and owns 100% of the Korean entity. It was the first change in five years, since Coupang was designated as a business group subject to disclosure in 2021.
With the controlling person changed to a natural person, Chairman Kim must now submit and disclose every year to the KFTC the shareholdings of himself, his spouse, and relatives in domestic and overseas affiliates.
Coupang has filed both a main lawsuit seeking to overturn the decision and a request to suspend its enforcement. If the court grants the suspension request, the effect of Bom Kim's designation as the controlling person will be halted until a ruling is issued in the main case.
 
scottchoi15@fnnews.com Choi Eun-sol Reporter