Fair Trade Commission Judges 'Coupang Co., Ltd.' as the Same Person
Coupang Breathes a Sigh of Relief Escaping Major Setback of Chairman Kim Beom-seok Being Designated as the Owner
Domestic Investment Expected to Accelerate
[Asia Economy Reporter Kim Cheol-hyun] The Korea Fair Trade Commission (KFTC) has given Coupang a sigh of relief by not designating Chairman Kim Beom-seok as the same person (head of the group). Contrary to previous expectations that Chairman Kim would likely be designated as the same person, the KFTC judged 'Coupang Co., Ltd.' as the same person, thus escaping a major adverse event that was feared. Coupang respects the KFTC's decision and stated that it will continue to strictly comply with the Fair Trade Act. With this breathing room, it is expected to accelerate domestic investments that have been pursued since its listing in the U.S.
On the 29th, the KFTC newly designated Coupang as a publicly disclosed business group and judged 'Coupang Co., Ltd.' as the same person. It explained that it comprehensively considered past cases, shortcomings of the current system, and the scope of affiliated companies. The KFTC stated that although it is clear that Chairman Kim controls domestic Coupang affiliates through the U.S. corporation, it considered that in previous cases of foreign business groups, the top domestic company was judged as the same person, that the current economic power concentration suppression measures are designed based on domestic premises and have shortcomings in regulating foreign same persons, and that whether Kim Beom-seok or Coupang is judged as the same person, there is currently no change in the scope of affiliated companies. Regarding this, Coupang said, "We respect the KFTC's decision" and "We will continue to strictly comply with the Fair Trade Act."
With the KFTC's recent measure concluding at the level of newly designating Coupang as a publicly disclosed group due to a significant increase in total assets last year (3.1 trillion won → 5.8 trillion won), Coupang is in a relieved mood. If Chairman Kim had become the head of the group, transactions with his spouse, relatives within six degrees of blood relation, and relatives within four degrees of affinity would all have been subject to disclosure. Transactions with U.S. headquarters affiliates would also have had to be disclosed domestically. Foreign executives of Coupang would also have been subject to disclosure.
Escaping this major adverse event is expected to invigorate Coupang's domestic investment, which could have been restrained. Coupang announced plans to invest more than 100 billion won to establish a new logistics center in Wanju-gun, Jeollabuk-do, just two weeks after listing on the New York Stock Exchange. This is expected to create about 2,000 new jobs. Subsequently, Coupang plans to invest 300 billion won to establish three new logistics centers in Gyeongsangnam-do, where 4,000 new jobs are anticipated. Chairman Kim had previously announced plans to invest 5 trillion won secured during the listing process into the Korean distribution market and to hire an additional 50,000 employees by 2025.
An industry insider said, "If Chairman Kim had been designated as the head of the group, it could have become an obstacle in expanding and growing the business overseas in the future, but avoiding this situation means that global business is also expected to accelerate." However, it is anticipated that the KFTC's judgment will be criticized as preferential treatment for foreigners, and related controversies are expected to continue. There are also forecasts that monitoring of Coupang, which is facing various labor issues, may weaken.
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