FTC vows strict action over Coupang Inc discount-cost transfer allegations

Chair rebuffs criticism that cartel fines are excessive

Regulator to pursue stronger financial penalties to deter probe obstruction

Fair Trade Commission Chairman Joo Byung-ki said Monday that Coupang Inc must "fulfill its social responsibilities in proportion to its growth and become a company that protects the rights of the weaker party."

Joo made the remarks at the FTC's national audit held at the National Assembly, responding to Democratic Party lawmaker Kang Jun-hyeon's observation that dispute-resolution filings against Coupang Inc by small and micro-businesses have been surging.

Fair Trade Commission Chairman Joo Byung-ki answers lawmakers' questions at the National Assembly's audit of the FTC's policy committee on Monday. [Yonhap]
Fair Trade Commission Chairman Joo Byung-ki answers lawmakers' questions at the National Assembly's audit of the FTC's policy committee on Monday. [Yonhap]

"It is true that Coupang Inc has seen rapid growth in sales recently, and it is equally true that it has delivered satisfaction to consumers," Joo said. "But the pursuit of unfair gains in that process must be minimized." He added that growing ever larger while disregarding social responsibility runs counter to the norms of a market economy.

Joo declined to give a direct answer on whether the FTC would resume an on-site investigation of Coupang Inc. When Democratic Party lawmaker Jeon Hyeon-hui asked whether the probe would restart — following a court's rejection of Coupang Inc's application to suspend the investigation — Joo said only that it was "difficult to say" and that the commission was "doing its best."

People Power Party lawmaker Park Sung-hoon asked whether the FTC would take strict action if it confirmed that Coupang Inc had passed on the cost of its personalized discount coupons to suppliers. Joo said it would. He gave the same answer when asked whether the commission should strengthen financial penalties — including compliance fines and surcharges — to prevent companies from refusing on-site inspections.

Joo rebuffed the suggestion that cartel fines are excessively high. PPP lawmaker Park Dae-chul raised the issue, noting that South Korea's cartel fines totaled $1.3 billion through September this year, equivalent to roughly 40 percent of the $3.3 billion levied worldwide last year.

"We impose fines that sufficiently exceed the illicit gains," Joo said. "The reason cartels do not decrease is that the fines are not large enough relative to the unfair profits derived from collusion."

In response to PPP lawmaker Seo Il-jun's concern that heavy fines could chill corporate activity, Joo pledged to improve the credibility of the penalty process. "I will ensure that investigators conduct the surcharge assessment process in a more transparent, objective and rigorous manner than at present," he said.

Joo was cautious about lowering the level of sanctions. "What concerns me more is going easy on companies that truly deserve to be punished," he said. "Unfair conduct will not stop repeating itself unless we impose sanctions sufficient to match the unfair gains companies have obtained."

He also addressed criticism that a significant gap exists between the relevant sales figures calculated during the FTC's investigation phase and the amounts finalized at the conclusion of deliberations.

"It is entirely natural for the fine calculated by an investigator to differ from the final figure," Joo said. "The investigative report reflects only the investigator's view, and the final decision is reached by fairly incorporating both the investigator's position and the respondent's position during the deliberation process."

When Park Sung-hoon raised allegations that the FTC inflates fines during the investigation stage only to reduce them at final deliberation — purportedly to steer cases toward law firms staffed by lawyers of a particular political leaning — Joo said he was "not politically biased" and pledged to "respect market concerns as much as possible and manage the process so that such concerns do not arise."

Joo also acknowledged that a social media post he had written criticizing districts in southern Seoul that voted heavily for the PPP in the June 3 local elections could be seen as an insult to voters, telling PPP lawmaker Park Jun-tae, "I think it could be understood that way."


y2k@heraldcorp.com