FTC chief vows criminal complaint against Coupang Inc over probe refusal

Fair Trade Commission Chairman Ju Byung-ki said the agency will pursue sanctions, including a criminal complaint, against Coupang Inc for refusing to cooperate with an on-site investigation.

Ju made the remarks Wednesday at a comprehensive policy hearing of the National Assembly's Budget and Accounts Special Committee, responding to a question from Democratic Party of Korea lawmaker Song Jae-bong about how the FTC planned to respond to Coupang Inc's refusal. "We are looking to file a (criminal) complaint," Ju said.

However, the Large-Scale Distribution Business Act contains no criminal penalty provision for refusing or obstructing an investigation, making it difficult to pursue a criminal complaint on that basis alone. Under that law, obstruction can draw an administrative fine of up to 200 million won ($145,000). The Fair Trade Act, by contrast, allows for a criminal referral when a party refuses, obstructs or evades an investigation, with penalties of up to three years in prison or a fine of up to 200 million won.

Ju also said the FTC would actively contest Coupang Inc's application to a court for a stay of enforcement. "An unprecedented situation has arisen and we intend to respond thoroughly," he said. "Coupang Inc has filed for a stay of enforcement with the court, so we will also respond to that litigation."

Asked whether the FTC could impose an administrative fine or criminal penalty on Coupang Inc, Ju said, "We can file a complaint and impose a fine." He added, "The fine is not particularly high, but it appears to be the best response available to us at this point."

Ju also said advance notice is not required under current law for FTC on-site investigations. "Under current law, the FTC's investigative authority is fully authorized to proceed without prior notification," he said. "We have consistently exercised it that way, and we have previously used the same legal authority to conduct investigations of Coupang Inc as well."

"Because Coupang Inc filed litigation exploiting a minor gap in the law, we have no choice but to respond to that suit," he said. "We intend to do everything we can independently."

The dispute between the FTC and Coupang Inc surfaced during an on-site investigation. The FTC made four attempts to conduct the probe as part of an inquiry into allegations that Coupang Inc had shifted the costs of personalized discount coupons onto its suppliers. Coupang Inc refused to cooperate each time, and no actual investigation took place.

Coupang Inc cited the lack of advance notice as grounds for its refusal. The company then challenged the FTC's investigative procedures by filing for a stay of enforcement with a court. The FTC said it will pursue sanctions against Coupang Inc for the refusal separately from its response to the litigation.