Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
Hefty fines loom for Baemin, Coupang Eats as FTC rejects self-correction bids
A Baemin rider delivers food in Seoul in this undated photo. Yonhap
By Lee Min-hyung
Regulator to proceed with full investigation into alleged abuse of market dominance
The Fair Trade Commission (FTC) has rejected self-correction proposals from the country's top two food delivery platforms, Baedal Minjok, informally known as Baemin, and Coupang Eats, paving the way for fines that could amount to tens of billions of won over allegations that they abused their market dominance, the antitrust watchdog said Thursday.
The regulatory authority rejected the companies’ applications for a consent decree — a mechanism that allows firms to resolve antitrust cases without admitting liability by offering voluntary remedies — ruling that they did not meet the legal requirements to initiate such a settlement process.
The fines expected to be imposed on Baemin and Coupang are estimated at 239 billion won ($157 million) to 510 billion won, and 25 billion won to 42 billion won, respectively.
Following the latest decision, the watchdog will resume its formal review to determine the illegality of the practices and the scale of sanctions.
The watchdog’s probe into the two companies has focused on finding alleged anti-competitive practices, including unfair treatment of affiliated partner restaurants and deceptive advertising.
According to the FTC, Baemin and Coupang Eats forced restaurants to accept terms in food prices, minimum order amounts and discount coupons equivalent to those on rival apps. Restaurants that did not agree to the terms were excluded from premium free-delivery membership programs, such as Baemin Club or Coupang Wow.
Fair Trade Commission Chairman Ju Biung-ghi speaks during a meeting with franchise industry officials in Seoul, June 9. Yonhap
Baemin is also accused of deceptive advertising by manipulating estimated delivery times on its main interface to make its proprietary "Baemin Delivery" look faster than its merchant-led "Store Delivery" service.
In their unsuccessful bids to halt the probe, Woowa Brothers, the operator of Baemin, offered to set up a 300 billion won co-prosperity fund for merchants over the next three years, while Coupang proposed a similar fund worth 60 billion won over the next four years.
The FTC's expected sanctions are likely to pose a heavy financial burden for both firms. Woowa Brothers reported an operating profit of 592.9 billion won last year, while Coupang posted an operating profit of 679 billion won during the same period.
"The FTC will determine the final level of penalty based on the relevant sales figure associated with the firms’ abuse of market dominance,” an FTC official said.
The latest decision underscores the regulator’s escalating crackdowns on major tech platforms.
Last month, FTC Chairman Ju Biung-ghi reiterated his willingness to take regulatory action against market-dominant platforms.
“Platform firms such as Coupang and Baemin are conducting unfair activities that are widely seen as grave and complex, and they are linked with violations of diverse laws,” Ju told reporters during a press conference last month.
Woowa Brothers said in a statement that it was “regrettable that the consent decree application, which was intended to quickly restore competitive order in the market and directly support small business owners, has been rejected,” adding that it will continue to engage with restaurant owners and pursue a “win-win” ecosystem for platforms, merchants and consumers.
Coupang said it plans to “faithfully present and explain its position through the upcoming review process.”