South Korea fines Coupang over supplier pressure, delayed payments

South Korea’s competition watchdog has imposed a penalty on Coupang for breaching retail trade rules, deepening regulatory scrutiny of the country’s largest e-commerce platform.

The Korea Fair Trade Commission said on Thursday it fined the company 2.2 billion won, or about $1.55 million, after finding it pressured suppliers to cut prices, absorb extra costs, and accept delayed payments.

The decision comes as Coupang prepares to report its fourth-quarter earnings and faces tighter competition and regulatory challenges following last year’s data breach, which hit consumer spending and wiped nearly 35% off its share price.

Supplier price cuts and margin targets

The Korea Fair Trade Commission said Coupang violated the large-scale retail business law by demanding reductions in supply prices to meet profit goals set internally.

According to the regulator, the company fixed gross margin targets and then pushed suppliers to make up any shortfall.

When vendors failed to meet those targets, Coupang at times negotiated or demanded lower supply prices. In some cases, it suspended or reduced orders.

The watchdog said the company also implied that orders could be cut if suppliers were uncooperative, using the risk of lost business as leverage.

The regulator described Coupang as the overwhelming number one market leader and said it forced suppliers to shoulder sacrifices to protect its own profitability.

Extra fees and cost burden

Beyond price reductions, the commission found that Coupang required suppliers to bear additional expenses tied to its commercial programmes.

These included advertising fees and charges linked to the Coupang Experience Group programme.

Under that scheme, selected customers receive free or discounted products in exchange for posting product reviews.

Suppliers were also asked to pay for premium data services offered by the platform.

If margins fell short of the targets set by the company, the regulator said Coupang used order cuts or the threat of such action to pressure vendors into absorbing those extra costs.

Delayed payments across transactions

In a separate violation, the watchdog said Coupang delayed payments in 508,752 direct purchase transactions involving 25,715 vendors.

The delayed payments occurred between October 2021 and June 2024. The total value of those late payments amounted to about 281 billion won, according to the commission.

The fine of 2.2 billion won reflects both the pricing practices and the payment delays identified in the investigation.

Regulatory pressure and market strain

The ruling adds to the challenges facing Coupang at a sensitive time.

The company is due to release its fourth-quarter earnings on Thursday, as competition in South Korea’s e-commerce market intensifies.

Coupang faces mounting pressure after a November data breach exposed the personal information of about 34 million users, including names, phone numbers and shipping addresses, though payment and login data were not compromised.

A government investigation is ongoing, with the Science Ministry attributing the incident to management failures rather than a sophisticated cyberattack.

The company said it would strengthen safeguards to prevent a recurrence.

Industry representatives say consumer confidence has weakened, and usage data reflect the shift: mobile monthly active users fell 3.5% between November and January, while rival Naver saw a 23% increase.

Average daily consumer spending on Coupang also declined 6.3% to roughly 139.2 billion won.

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