Coupang fined for pushing suppliers around
According to the Fair Trade Commission (FTC) on Thursday, Coupang unfairly meddled in the management of its suppliers and unfairly charged them marketing expenses of its own.
The suppliers it pressured included big companies like LG Household & Healthcare, Yuhan Kimberly, P&G Korea, SK Magic and Lego Korea.
The FTC said Coupang demanded 101 suppliers raise the prices of products sold on other e-commerce platforms including Gmarket and 11st between 2017 and September 2020.
Additionally, the company followed a policy in which the price of a product on Coupang is immediately lowered when it was lowered on a competing site. When the price was raised on a competing e-commerce site, it was raised on Coupang as well.
The company managed prices of 360 products in that way.
The antitrust authority saw such moves as meddling in the management of the suppliers.
Coupang also forced suppliers to buy 213 advertisements to cover its losses from its lowered price policies. When prices were lowered, so were Coupang's commissions on sales.
Coupang also forced suppliers to participate in a discount event held between 2018 and the first half of 2019.
A total of 388 suppliers suffered 5.7 billion won in losses as a result.
Coupang also pocketed 10.4 billion won from 330 suppliers as compensation for helping products reach sales goals, which was not in the contract, the FTC said.
“Online shopping is growing rapidly and online retailers, which are now in a more powerful position, are violating the law including demanding prices being raised as well as forcing [suppliers] to buy ads,” said Cho Hong-sun, the FTC's director general for distribution policy.
Coupang reacted to the FTC ruling in a statement on Thursday. Coupang claimed that the issue started with LG Household & Healthcare, which sold through Coupang for a long time. It said some of the products it sold on Coupang were double the price at other retailers.
The company said it will take the issue to court.
According to Statistics Korea, Coupang last year was the second-largest e-commerce platform in Korea with a market share of 13.7 percent. The market leader was Naver with 18.6 percent.
However, those market shares may have changed after Shinsegae bought eBay Korea in June.
Last year, eBay Korea ranked third in market share with 12.4 percent. A combination of Shinsegae’s SSG.com and eBay Korea could have a market share of 15 percent.
Coupang has been expanding rapidly. Revenue in 2020 amounted to 13.9 trillion won, more than double the 7.1 trillion won in the previous year, largely thanks to people shopping online during the pandemic.
But it's not in the black and last year suffered a net loss of 600 billion won.
Coupang gained global attention with a successful IPO on the New York Stock Exchange (NYSE) in March. But a major fire in a warehouse in Icheon, Gyeonggi, resulted in the death of a firefighter and deeper losses.
Coupang reported last week that net losses in the second quarter amounted to $518.6 million, a 408 percent increase year-on-year.
BY LEE HO-JEONG [firstname.lastname@example.org]