Antitrust regulator reviewing possible sanctions against AliExpress

A shopping trolley is seen in front of AliExpress logo. [REUTERS/YONHAP]

Korea’s antitrust regulator initiated sanction proceedings against AliExpress for allegedly violating the e-commerce law.

The Fair Trade Commission (FTC) on Monday sent an examination report to AliExpress, accusing the Chinese e-commerce giant of breaching its reporting duty as an online seller.

Under the Act of the Consumer Protection in Electronic Commerce, online marketplace operators are obligated to report their company names, email addresses, internet domain names and the location of host server computers to regional governments.

The local operation of AliExpress registered itself under the name AliExpress Korea Limited with its location filed as Jung District in central Seoul, and the location of its host server as Geumcheon District in southern Seoul.

However, the FTC has decided that AliExpress Korea does not qualify as the actual operator of the online marketplace, as all core operations of its business are handled by its Chinese headquarters or other legal entities while the Korean branch only serves as a legal representative.

The FTC is reportedly investigating Temu as well, which has yet to file a report as an e-commerce service provider.

The legal proceeding of the commission begins with the filing of an examination report, followed by a deliberation process based on the findings. If the examinee is found guilty by an FTC committee after hearings, the antitrust watchdog decides on the scope of the penalty.

The FTC is looking into other allegations involving Chinese e-commerce companies, such as false advertisement and consumer deception by falsifying the full price when advertising discounted prices.

Temu and AliExpress also face accusations of breaching consumer privacy with unfair contract clauses by requiring users to consent to the provision of personal information to third parties in the terms and conditions when signing up for an account.

The transaction volume of direct purchases from China rose to a new record in the first quarter of this year as AliExpress and Temu rapidly expanded their market share in Korea. However, both platforms have seen an on-month decline in the number of users in April and May, according to data compiled by market tracker WiseApp, Retail, Goods released on Monday, as safety concerns arose over products sold on the platforms.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]