SEOUL – South Korea’s competition authority announced Thursday it has imposed a 2.2 billion won ($1.55 million) penalty on e-commerce company Coupang for coercing suppliers into price cuts and making them absorb extra expenses to help the retailer meet its profit goals, while also holding up vendor payments.
The Korea Fair Trade Commission (KFTC) determined that the online shopping platform broke the nation’s large retailer regulations by demanding supply price reductions and forcing vendors to cover advertising costs and other fees to help Coupang reach company-established margin objectives.
“As the overwhelming No.1 market leader, Coupang forced suppliers to bear sacrifices in order to maintain its profit margins and used retaliatory measures such as suspending or reducing orders when suppliers refused or were uncooperative,” the regulator said in a statement.
According to the commission, when vendors couldn’t achieve the required targets, Coupang would negotiate or insist on reduced supply costs, and would halt or decrease orders, or suggest it might take such actions to apply pressure on suppliers.
The company established gross profit targets and made suppliers absorb extra charges, including marketing fees, costs for its “Coupang Experience Group” initiative – where chosen customers get free or reduced-price items for writing product reviews – and premium data services. When profit margins didn’t meet expectations, the firm used order reductions or threats of such measures as bargaining tools, regulators found.
In an additional infraction, the KFTC reported that Coupang held up payments to suppliers across 508,752 direct buying deals involving 25,715 vendors from October 2021 through June 2024. The combined amount of these delayed payments reached approximately 281 billion won.
The company, scheduled to announce fourth-quarter financial results Thursday, is dealing with growing competitive pressure and regulatory challenges following last year’s major data security incident that reduced consumer spending and wiped out nearly 35% of its stock value.
