Fair Trade Commission Chairman Reviews Coupang's 'Cleansing Clause' for Potential Unfair Labor Provider Practices

Han Ki-jung, Chairman of the Fair Trade Commission, announced on the 26th that he would "review whether it constitutes an unfair practice" in relation to Coupang's permanent zone recovery system, commonly referred to as the 'cleansing clause.'

Han Ki-jung, Chairman of the Fair Trade Commission, is speaking at the emergency inquiry on the "Timon and Wemakeprice Settlement and Refund Delay Incident" held on the 30th at the National Assembly's Political Affairs Committee. Photo by Hyunmin Kim kimhyun81@

Chairman Han made this statement during the plenary session of the National Assembly's Political Affairs Committee in response to a related inquiry from Kim Nam-geun, a member of the Democratic Party of Korea.

Assemblyman Kim Nam-geun cited the death of the late delivery driver Jeong Seul-gi, who worked night-time Rocket Delivery at Coupang in May, pointing out that the excessive working conditions during early morning hours could seriously harm the health of delivery workers.

He then criticized Coupang CLS's 'cleansing system,' which recovers or changes delivery zones if delivery performance rates are not met, stating that it falls under the category of unfair trade practices, specifically unjust refusal to deal.

Chairman Han responded, "There are guidelines related to unfair trade practices targeting labor providers," adding, "We will review this matter accordingly."

Regarding allegations of Coupang's 'bundling of Eats and Play,' he said, "A report has been received, and an investigation is currently underway," and added, "We will conduct a prompt investigation and take action if charges are confirmed."

Earlier, the 'Online Platform User Complaint Reporting Center,' composed of the People's Solidarity for Participatory Democracy's Livelihood Hope Headquarters and others, reported Coupang to the Fair Trade Commission for violating the Fair Trade Act. The group claimed, "Coupang unilaterally raised the Wow Membership price by about 58% while bundling separate services such as Coupang Play and Coupang Eats budget delivery service for free."

Assemblyman Kim Nam-geun pointed out that Coupang is abusing its dominant position in the online shopping market by raising membership prices and charging high commissions to small business owners.

Chairman Han responded, "The principle is that we cannot directly intervene in issues related to prices such as commissions," but added, "We will review whether this constitutes abuse of monopoly power."

Regarding criticism that Coupang's settlement cycle is much longer compared to other online intermediary platforms, he explained, "Following the TMON and WEMAKEPRICE incidents, we are promoting legislation to shorten the settlement period," and added, "In the future, we will consider legislation for areas that go beyond self-regulation."