Submission of 5 Documents After Execution Suspension Hearing
Court to Decide on Approval Possibly Today
If Approved, Execution Suspension Temporarily Loses Effect
162.8 Billion Won in Penalties Already Paid
The legal battle over the 160 billion won fine imposed by the Fair Trade Commission (FTC) on Coupang for manipulating search rankings is intensifying. Although the court has concluded the hearing on Coupang's request for a suspension of execution along with the main lawsuit, both Coupang and the FTC's legal teams have entered a 'written war' to persuade the judges.
According to related industries and the legal community on the 4th, after the hearing for the suspension of execution in the lawsuit filed by Coupang against the FTC's corrective order was completed, both parties submitted a total of five documents to the court. The hearing for the case ended on the 24th of last month at the Seoul High Court Administrative Division 7 (Presiding Judge Gu Hoe-geun), but Coupang and the FTC have continued their written dispute for about ten days.
The previous hearing was conducted privately. At that time, Coupang requested confidentiality on the grounds that the search ranking algorithm is a core part of their business and that public disclosure could cause various problems. The court accepted this request, so the hearing details were not made public.
The written dispute began after the FTC submitted a procedural opinion statement on the 27th of last month. The FTC then submitted one additional reference document and one piece of evidence on the 30th. In response, Coupang submitted its first reference document on the 30th and a procedural opinion statement on the 2nd of this month. A legal insider said, "It is possible that these documents were requested by the court during the hearing," adding, "Regarding the procedural opinion statement, since the suspension of execution corresponds to a provisional injunction in civil cases, it likely contains a request for a prompt decision."
The court is expected to issue a ruling on Coupang's application for suspension of execution as early as today, either granting or dismissing it. Another legal source explained, "A suspension of execution case is filed when there is an urgent need to halt the effect of an administrative agency's action before the main lawsuit, and courts usually make a decision quickly," adding, "It typically takes about a week, but the period can vary depending on the court's discretion."
If the court accepts the application, the FTC's corrective order will temporarily lose its effect. The corrective order issued by the FTC in August reportedly included demands to stop manipulating the search algorithm and misleading consumers into believing that private brand (PB) products are superior through employee reviews, thereby inducing purchases. However, Coupang has repeatedly stated that "all retailers prioritize recommending and displaying their own PB products," asserting that the current search display is inevitable.
Earlier, in June, the FTC found that Coupang and its subsidiary CPLB, which exclusively supplies PB products, violated the Fair Trade Act and imposed a fine of about 140 billion won, while also referring both entities to the prosecution. The fine of approximately 140 billion won was based on sales figures up to July of last year, but with additional sales included up to June of this year, when the review concluded, the fine Coupang must pay increased to about 162.8 billion won. This is the largest fine ever imposed on a domestic distributor.
Coupang is reported to have already paid the 162.8 billion won fine imposed by the FTC last month. It appears that Coupang has adopted a strategy to recover the paid fine after winning the main lawsuit. Previously, Coupang's parent company, Coupang Inc., disclosed its second-quarter earnings, reflecting an estimated FTC fine of 163 billion won in the selling and administrative expenses, resulting in an operating loss of 34.2 billion won.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
