Coupang, Already Under Repeated KFTC Scrutiny, Faces Court Battle Over '7-Day Notice'

[Financial News] Attention is focusing on why Coupang filed a lawsuit seeking to cancel the Korea Fair Trade Commission (KFTC)'s on-site inspection. The immediate issue is whether the agency gave seven days' prior written notice, but retail industry observers say the legal move was also shaped by more than a decade of repeated KFTC investigations and sanctions. In particular, they note that tensions escalated into a court fight over the legality of the on-site inspection as investigations intensified after the personal data breach in November last year.
According to the retail industry on the 28th, Coupang filed a lawsuit on the 21st seeking to cancel the KFTC's on-site inspection and also requested a stay of execution. On the 27th, the Seoul High Court temporarily suspended the effect of the KFTC's ex officio investigation decision until the 23rd of next month.
Coupang argues that the KFTC failed to comply with its obligation under the Administrative Investigations Basic Act to provide written notice seven days before an on-site inspection. When Coupang refused to cooperate with the investigation, the KFTC confirmed that a lawsuit had been filed and withdrew from the site on the 24th.
The conflict between Coupang and the KFTC has continued for more than 10 years. The KFTC imposed a fine of 3.3 billion won and corrective orders on Coupang over demands for price increases from suppliers and forced advertising purchases, but the courts overturned all of them. The courts said it was difficult to conclude, based only on the evidence submitted by the KFTC, that Coupang had engaged in conduct outside normal trade practices.
Since then, investigations and sanctions have continued every year over supplier contracts, target margins, private label brand products, subcontracting transactions, preferential treatment for delivery apps, and membership operations. Some cases were closed with no charges or through consent decrees. In a case involving manipulation of search rankings, Coupang was hit with a 162.8 billion won fine in 2024, and an administrative lawsuit is now under way.
Coupang believes the KFTC's investigations have intensified since the personal data breach in November last year. While on-site inspections have continued to examine possible violations of the Act on Fair Transactions in Large Retail Business, reviews are still pending on allegations involving preferential treatment for delivery apps and bundling with membership services.
The court is expected to determine whether this investigation falls under the exceptions to prior notice. The Administrative Investigations Basic Act allows prior notice to be omitted when it would be difficult to achieve the purpose of the investigation, such as when there is a risk of evidence destruction. The KFTC is considering criminal complaints and fines in response to Coupang's refusal to cooperate with the investigation.
As Coupang has used the prior-notice requirement to block the on-site inspection, the government and the political circle are responding by moving to strengthen the legal basis for surprise inspections. The KFTC is also reviewing criminal complaints and fines over Coupang's refusal to cooperate. The ruling party is pushing for amendments to five laws, including the Act on Fair Transactions in Large Retail Business, so that investigations under those laws would be exempt from prior notice. If the revision passes, the KFTC would be able to conduct on-site inspections without prior notice for suspected violations of those laws.
[email protected] Lee Jeong-hwa Reporter