FTC's move to 'restrain' Coupang founder hits snag

The Korea Times

The Korea Times

Business

Tue, October 3, 2023 | 13:40

Companies

FTC's move to 'restrain' Coupang founder hits snag

Posted : 2022-08-01 16:41

Updated : 2022-08-02 15:58

Coupang founder Bom Kim / Korea Times file

By Lee Kyung-min

The years-long move by Korea's antitrust agency to designate Coupang founder Kim Bom-suk as the head of a large conglomerate has been postponed due to inter-ministerial discord, according to officials Monday. The Korean American with U.S. citizenship widely known as Bom Kim founded the e-commerce giant, a New York Stock Exchange-listed firm.

The Fair Trade Commission (FTC) has long sought the designation, put in place in 1986 to limit the power and influence of the country's large, family-run conglomerates. As long as a year will be needed to resume the move, contingent upon agreement between the related authorities.

"We decided to delay the announcement until after an agreement is reached," an FTC official said. "It remains uncertain as to how soon the date will be."

Behind the last-minute decision was opposition from the finance, industry and foreign ministries, which maintain that the issue could spark a full-fledged trade dispute between Korea and the U.S.

They say the designation violates "the most-favored-nation," a bedrock World Trade Organization principle. U.S. top trade authorities reportedly urged their Korean counterparts twice over the past few months that the issue be placed at the top of the agenda.

Also at play is a growing concern that many foreign businesses will scale down or altogether scrap investment plans. Korea has long been bogged down by a lack of predictability and consistency in legal and regulatory frameworks, a reason many foreign investors say they face discrimination.

Officials walk into a conference room inside the Fair Trade Commission building in the Sejong Government Complex. Korea Times file

The postponement presents a challenge to the antitrust agency's years of efforts to tighten regulations on Kim, whom it says de facto controls the firm, powered by the most dominant e-commerce market presence in the country.

Under the FTC law, any business organization with over 5 trillion won ($3.8 billion) in total assets is designated as a large conglomerate every year. Those designated are prohibited from cross-investments and have their investment ceilings restricted.

The designation will require Kim and key executives of overseas subsidiaries to submit and publicly disclose the shares held by what Korean law defines as "close family members and close acquaintances." Any deliberate omission or manipulation of critical data will result in up to two years in prison or up to 150 million won ($114,700) in fines.

lkm@koreatimes.co.kr