Coupang faces raft of complaints

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Coupang faces raft of complaints

Coupang continues to be the talk of the town. Sometimes for the wrong reasons.

A few weeks after mobile delivery platform Baedal Minjok reported Coupang to the Fair Trade Commission (FTC) for unfair business practices last month, e-commerce operator WeMakePrice and LG Household & Health Care reported the company to the FTC for similar reasons.

WeMakePrice said Wednesday that it lodge the complaint, alleging that the online retailer had violated the retail law by taking advantage of its market power. WeMakePrice argues Coupang unfairly shifted its sales promotion fees to suppliers and encouraged them to stop providing goods to its rivals, including WeMakePrice.

Since April 30, WeMakePrice has been undertaking a promotion to offer products at the lowest price. The primary target was Coupang, as it promised to rebate twice the amount of the price difference if its goods were found to be more expensive than the same products on Coupang.

WeMakePrice says its strategy has been interrupted recently, and claims Coupang is the main reason.

“We have invested aggressively on sales promotion to provide the lowest prices to customers since we made the announcement in April,” said WeMakePrice in a statement. “But recently, we have been told by suppliers that the goods are out of stock without clear reason … Some suppliers even refused to accept our financial support for the sales promotion.”

WeMakePrice suggests Coupang arbitrarily lowered the price of certain products if they were found to be sold at a lower price by its rivals.

Coupang would later demand the suppliers make up for the price difference between its initial selling price and the discounted price, according to WeMakePrice.

The company argues Coupang also encouraged suppliers to halt deals with other companies by abusing its market power.

LG Household & Health Care on Wednesday said it reported Coupang to the FTC for unfair practices. They include shifting the financial loss incurred from the low product sales to LG Household & Health Care and demanding the company supply the goods at a lower price than its rivals.

A sudden scrapping of a contract just before goods were about to be delivered is another misdeed alleged by the lifestyle and beauty company.

Coupang is denying everything.

“To offer the lowest price and fast delivery, Coupang adopts innovative technologies and utilizes new business methods to reduce consumer inconvenience. We negotiate with diverse people of similar interests during that process, but we never used illegal means,” said a spokesperson for Coupang.

With regard to the claim by WeMakePrice, Coupang denied having shifted the sales promotion fee to its suppliers, but didn’t respond to the alleged deals it had with suppliers to prevent the goods from being supplied to rivals.

Last month, Baedal Minjok accused Coupang of reportedly obtaining its confidential business information and attempting to sign exclusive contracts with restaurant owners for its newly-launched food delivery platform, Coupang Eats.

“Unfair acts in the retail industry have always been prevalent,” said Seo Yong-gu, a professor of business at Sookmyung Women’s University.

“Before the appearance of e-commerce platforms, the competition was primarily among giant discount chains, like Emart, Lotte Mart and Homeplus. But Coupang has now become the primary target of retailers following the changing competition structure and its exponential growth,” said Seo.

BY JIN MIN-JI [jin.minji@joongang.co.kr]

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