Coupang files complaint against Olive Young

An Olive Young Health & Beauty store [CJ OLIVE YOUNG]

Coupang, a leading e-commerce operator listed in New York, accused beauty store chain CJ Olive Young of violating a retail business act in a complaint filed with the Fair Trade Commission (FTC) on Monday.

The e-commerce company said in a statement that Olive Young engaged in unfair business practices by discouraging cosmetics vendors from supplying their products or doing business with Coupang, impeding Coupang's entry into the beauty market. Coupang claims to have suffered "substantial losses" as a result, with the company unable to procure competitive products from suppliers due to Olive Young's alleged actions.

The complaint also highlights specific instances where Olive Young allegedly exerted pressure on beauty companies. One case involves a small beauty company, identified as Company A, which was allegedly coerced by Olive Young to downsize its store after revealing plans to supply products to Coupang, with Company A eventually abandoning the idea. Company B faced similar hurdles, as Olive Young designated popular products as "prohibited items" to prevent them from being supplied to Coupang. Company C also had to cancel its plans to supply its products to Coupang as it claims to have faced threats from Olive Young to reduce product quantity and variety if it went ahead.

Under scrutiny is Article 13 of the Act on Fair Transactions in Large Retail Business, which specifically prohibits large-scale retailers from abusing their dominant market power over suppliers.

In response, Olive Young has denied Coupang's allegations.

The FTC has been investigating Olive Young over an allegation that it implemented unfair business practices in supply deals with "lalavla," a beauty store chain operated by GS Retail, and "LOHB's," operated by Lotte Shopping.

Olive Young's dominant position in the health-and-beauty market is evident, with the company holding a 70 percent market share. Lalavla withdrew from the market in November 2021, while "Boons" and "Boots", operated by Shinsegae Group, also closed in 2020. Similarly, LOHB's has consolidated its branches into 12 shop-in-shop stores within Lotte Mart.

BY SEO JI-EUN [seo.jieun1@joongang.co.kr]