Coupang Fined $1.6 Million Over Supplier Pressure in Korea
South Korea fined Coupang 2.2 billion won for pressuring suppliers to cut prices and delaying payments. The regulator cited multiple retail law violations.
The antitrust regulator in South Korea[Country:{\"assets\":{\"country\":\"KR\"}}] has announced a fine against e-commerce leader Coupang, Inc.[Symbol:{\"assets\":{\"symbol\":\"CPNG\"}}] totaling 2.2 billion won (approximately $1.55 million). The penalty follows an investigation into the company's practices regarding supplier relations and payment schedules.
According to the Korea Fair Trade Commission (KFTC), the retail giant violated national laws governing large-scale retail businesses. The regulator found that Coupang pressured its suppliers to lower supply prices and forced them to absorb various operational costs, including advertising fees, to help the company reach its internal profit margin targets.
\"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 KFTC stated.
The investigation revealed that when profit margins fell short of expectations, Coupang would negotiate for lower prices or threaten to reduce order volumes as leverage. Suppliers were also required to pay for the \"Coupang Experience Group\" program, which provides free or discounted products to customers in exchange for reviews, as well as premium data services.
In addition to unfair pressure on margins, the KFTC identified significant delays in payments to vendors. Between October 2021 and June 2024, Coupang allegedly delayed payments for 508,752 direct purchase transactions. This affected 25,715 vendors, with the total value of the delayed payments reaching approximately 281 billion won.
These regulatory challenges arrive as Coupang prepares to release its fourth-quarter earnings report. The company has been navigating a difficult environment characterized by intense market competition and the lingering effects of a major data breach last year, which contributed to a significant decline in its share price.
