This article was published on May 25, 2025, at 8:26 a.m. on the ChosunBiz RM Report site.
Korea's top electronic commerce corporation, Coupang, is undergoing a "twin trial." One is an administrative lawsuit seeking to cancel the penalty surcharge of 1.628 billion won imposed by the Fair Trade Commission. The other is a criminal lawsuit filed by the prosecution for violations of the Fair Trade Act.
The two lawsuits are essentially twin trials with the same issues. Whether Coupang's action of exposing its products at the top of the search results to boost sales constitutes a violation of the Fair Trade Act will determine the outcome of both lawsuits.
In the legal community, reactions include that "there has never been such an issue addressed in a violation case of the Fair Trade Act regarding electronic commerce companies, making Coupang the first case," and that "attention is focused on what judgment the court will render."
◇ Following the lawsuit to cancel the penalty surcharge of 1.628 billion won, a criminal trial for violation of the Fair Trade Act
This case arose after the Fair Trade Commission imposed a penalty surcharge of 1.628 billion won on Coupang in June last year and referred the case to the prosecution, creating a "twin trial" situation. The Fair Trade Commission's investigation revealed that Coupang manipulated search rankings so that its private brand (PB) and directly purchased products would rank highly under the "Coupang ranking order".
The penalty surcharge of 1.628 billion won imposed on Coupang by the Fair Trade Commission is the highest amount ever in the distribution industry. In response, Coupang is pursuing an administrative lawsuit in the Seoul High Court to cancel the penalty surcharge. On top of that, the Seoul Eastern District Prosecutor’s Office indicted Coupang for violations of the Fair Trade Act on the 1st, asserting that the corporation should also bear criminal liability.
According to the indictment submitted by the Ministry of Justice to the National Assembly, Coupang was found to have artificially changed search rankings for over 50,000 PB and directly purchased products to ensure visibility in the "Coupang ranking order" from 2019 to last year. Although Coupang claimed that the "Coupang ranking order" was determined based on past sales performance, user preferences, product competitiveness, and search accuracy, the prosecution has judged this to be untrue.
Accordingly, Coupang is subject to a provision of the Fair Trade Act stating that "companies that improperly induce a competitor's customers to transact with them must face criminal penalties."
The indictment also states that initially, Coupang made its employees directly input search terms and rankings. As the number of products needing ranking adjustments increased, it is said to have developed and implemented an algorithm.
◇ Coupang: "Large supermarkets can freely display products" vs. Authorities: "The impact on consumer choices is markedly different"
The core issue of the Coupang case is whether online retailers’ product display practices can be penalized as a violation of the Fair Trade Act. Coupang argues that placing its PB products at the top of search results is similar to how large supermarkets display their own PB products on the top row or at the front of shelves. They claim that while the Fair Trade Commission does not take issue with the product displays at large supermarkets, penalizing only Coupang constitutes reverse discrimination.
In response, the Fair Trade Commission counters that the nature and meaning of search rankings of electronic commerce companies are entirely different from the displays in offline stores. After announcing the sanction against Coupang last year, the Fair Trade Commission stated at a press briefing, "Consumers visiting large supermarkets tend to roam around the store to see products and decide on purchases." They added, "Consumers of electronic commerce companies like Coupang are more likely to focus on the products that are prominently displayed, which means that search rankings have a significant impact on sales."
A fair trade specialist attorney from a major domestic law firm noted, "There has been no precedent globally for competition authorities to sanction electronic commerce companies over product displays." He continued, "Depending on how the court concludes this case, Coupang may need to change its business model, which could have significant ripple effects across the entire electronic commerce sector."