FTC approves Coupang’s co-prosperity plan for its private brand contract

A Coupang delivery truck is parked at the firm's logistics center in Seoul, June 11. Yonhap

The Fair Trade Commission (FTC) has approved a 3 billion won ($2 million) "co-prosperity" remedy package proposed by Coupang to resolve its allegation that the e-commerce giant unfairly slashed supply prices for its private brand (PB) products.

The decision will allow Coupang to avoid regulatory sanctions and will instead fund product development, advertising and other related expenses for its subcontractors.

Since October 2022, Coupang had been under investigation for violating the Fair Transactions in Subcontracting Act. The company allegedly failed to issue formal, legally compliant contracts to 314 subcontractors. It was also accused of forcing 94 suppliers to fund uncontracted promotional events and cut supply prices for its PB goods.

The FTC finalized Tuesday the consent decree for Coupang and Coupang Private Label Brands, which handles manufacturing and sales operations for the retailer’s private brand products.

Under the consent decree, companies can settle antitrust cases without admitting liability by offering voluntary remedies.

The decision marks the first time a consent decree has been finalized for price fixing since the mechanism was introduced to the act in July 2022.

The outcome contrasts sharply with a ruling last week, when the FTC rejected a separate, much larger 60 billion won co-prosperity proposal from Coupang Eats.

In that case, the regulator rebuffed Coupang Eats’ bid to halt a probe into allegations that the food delivery platform used its dominant market position to force its restaurant partners into unfair contracts.

The FTC decided not to accept Coupang’s self-remedy proposal in that case, saying that partner merchants and customers were victimized by its unfair business practices and that the platform's actions limited free market competition, requiring stern sanctions.

However, in the most recent case, the watchdog took into account that Coupang had proposed the promotional events but not required them, making it legally difficult to definitively categorize them as unfair business practices.