The Korea Fair Trade Commission is expected to decide next week whether to designate Coupang founder Kim Beom-suk, chair of Coupang Inc. (U.S. headquarters), as the "same person," according to information on the 24th. The "same person" refers to the head of a large corporate group. The Fair Trade Act uses the term "same person" because it means the "same person" in effect controls the business operations of multiple companies. Under U.S. law, the focus is on "de facto control," and the term "controlling person" is used.
Coupang has strongly opposed designating Chair Kim Beom-suk as the same person. If designated, the individual must report the stock holdings and transaction status of both the person and their relatives. The same person and related parties are also subject to various regulations when establishing or converting to a holding company, and they may face restrictions on exercising voting rights. Coupang argues that Kim does not effectively control the company and that it meets all the exceptions for same-person designation under the Fair Trade Act.
In this situation, some say controversy could erupt whether the Korea Fair Trade Commission designates Kim as the same person or not. If designated, Coupang and its U.S.-based investors could become entangled in legal disputes. If not designated, it could face backlash from civic groups.
◇ After Coupang's personal data leak, controversy erupts over "Kim Beom-suk's younger brother participating in management"
Since designating Coupang as a large corporate group in 2021, the Korea Fair Trade Commission (FTC) has considered the Coupang corporation, not Chair Kim personally, as the same person. The Fair Trade Act says that even if an individual effectively controls corporations, a same-person designation may be waived if all four conditions are met. The conditions are: ▲ the scope of the corporate group is the same whether the same person is treated as a natural person or a corporation; ▲ no investments are made in domestic affiliates other than the top-tier company; ▲ relatives do not participate in management; and ▲ there are no debt guarantees or fund lending among domestic affiliates.
However, after last year's Coupang personal data leak, it became known that Kim's younger brother, Vice President Kim Yu-seok, worked at Coupang and received tens of billions of won in compensation. This raised the possibility of not meeting one of the exception conditions for same-person designation. In an interview with Yonhap News last month, Korea Fair Trade Commission Chair Ju Biung-ghi, when asked whether Kim would be designated as the group head, said, "If it is confirmed that related parties participated in management, the same person can be designated as an individual." In other words, if Kim's brother participated in management, Kim could be designated as the same person.
◇ If designated, possible legal disputes with Coupang; if not, backlash from civic groups
Some say controversy could erupt whether the Korea Fair Trade Commission (FTC) designates Kim as the group head or not.
The Citizens' Coalition for Economic Justice (CCEJ) said in a statement on the 23rd, "It is hard to deny that Kim, as the founder and final decision-maker, exerts decisive influence over overall management strategy, investment, and governance," adding, "The Korea Fair Trade Commission (FTC) should no longer defer judgment by relying on formal logic, but should designate Chair Kim Beom-suk as the same person based on substantive control and economic influence."
Coupang countered in a statement, saying, "Kim's brother does not hold equity in Coupang's domestic affiliates and is not an executive (CEO, director, auditor, or manager) under the Fair Trade Act." It added, "Designating a same person for Coupang could violate most-favored-nation obligations under the U.S.-Korea FTA by treating the United States less favorably than a third country, and could violate investor protection obligations by undermining investors' investment stability."
Previously, U.S. investment firms Greenoaks and Altimeter, which invested in Coupang, filed an investor-state dispute settlement (ISDS) case against the Korean government after our government formed a pan-government task force (TF) and launched a full-scale investigation following Coupang's personal data leak.