Do not go gentle into that good night, old age should burn and rave at close of day; Rage, rage against the dying of the light, though wise men at their end know dark is right, because their words had forked no lightning they, do not go gentle into that good night.
Coupang claims FTC's W140 bil. fine is 'discriminatory'
Coupang's delivery trucks are parked at the firm's distribution center in Seoul, Thursday. Yonhap
By Jhoo Dong-chan
Coupang refuted a recent decision from the Fair Trade Commission (FTC) to fine it 140 billion won ($101 million) for its alleged unfair business practices, which were said to be “deceiving consumers” by fabricating its webpage’s recommendations algorithm. The country’s largest retailer claimed the allegation is irrelevant, adding it will file an administrative litigation against the decision.
If the decision stands, however, the figure is the largest of its kind ever imposed on a domestic retailer.
According to the antitrust watchdog, Thursday, Coupang had allegedly manipulated the customer recommendation algorithm on its webpage to promote the company’s private and partner brands as well as products delivered via its famous Rocket Delivery service for four and a half years since February 2019.
“The algorithm had nothing to do with each product’s sales. Coupang has intentionally exposed its certain brands and products on the top of its webpage over other products to maximize its profits. It also allowed its own workers’ favorable reviews on their products as well.” it added.
“This is an unfair business practice utilizing Coupang’s dominant market position as an online platform and a vendor.”
Coupang immediately rebutted the FTC’s allegations, claiming the decision was “discriminatory” and would eventually jeopardize consumers’ right to buy goods at cheaper prices.
“Major offline retailers also display their own brands and products at a so-called ‘Gold Zone’ that attracts the most attention from customers to maximize their profits,” a Coupang official said.
“In our understanding, their 'Gold Zone' strategy to promote their own brands and products helps boost their sales by at least 30 percent to 400 percent. Coupang’s own brands and products occupied only 5 percent of its total sales last year. It is so discriminatory.”
Kim Dae-jong, a professor of business administration at Sejong University, agrees.
“There is no precedent case to fine such a huge amount of money for placing in-house or partner brands and products at the top of a retailer’s webpage,” Kim said. “This will also jeopardize consumers’ right to buy goods at cheaper prices if a retailer spends more money in marketing their cost-effective products.”
Coupang said in a press release that other domestic e-commerce players, such as Market Kurly, Baemin and SSG, also expose their own brands and products at the top of their web pages.
“We also allowed our workers’ reviews on our in-house products as a tool to deliver related information. Some information isn’t available for ordinary consumers,” it said.
“If the FTC’s decision stands, it will greatly discourage Coupang’s future investment in offering cost-effective goods at cheaper prices with a shorter delivery time.”
Ahn Seung-ho, a professor of business administration at Soongsil University, also criticized the FTC’s decision.
“There are no such regulations in any countries in the world,” Ahn said. “The decision will jeopardize the majority’s benefits while deteriorating local retailers’ competitiveness.”