The Korea Fair Trade Commission said on the 18th it decided to reject an application to open a consent decision procedure on alleged abuses of market-dominant positions by Woowa Brothers (Baemin) and Coupang at a full commission meeting on the 10th.
The consent decision system allows corporations under investigation or review by the Korea Fair Trade Commission to propose their own corrective measures, and if the Korea Fair Trade Commission (FTC) finds them reasonable, the case is closed without determining whether the law was violated. If an application to open a consent decision procedure is rejected, the Korea Fair Trade Commission (FTC) resumes the suspended sanction process.
Earlier, the Korea Fair Trade Commission (FTC) determined that the two companies used their dominance in the delivery app market, where their combined share exceeds 90%, to force unfair transaction terms on onboarded businesses and consumers.
According to the Korea Fair Trade Commission (FTC), the two companies required onboarded businesses to offer food prices and minimum order amounts lower than on other delivery apps. They also penalized businesses that did not comply by excluding them from stores that offer benefits such as free delivery for membership subscribers.
In addition, Baemin was found to have effectively forced use of the pricier "Baemin Delivery" instead of the relatively cheaper "store delivery" by expanding exposure for delivery shops. It also calculated estimated times differently by delivery method, advertising as if Baemin Delivery was faster than store delivery. Coupang forced use of Coupang Eats (delivery app) on consumers of its online shopping service through three mechanisms: integrated membership sign-up, unified shopping app UI, and the integrated Wow membership.
To avoid a penalty surcharge and other measures, Baemin and Coupang submitted voluntary corrective plans totaling 360 billion won and applied to open the consent decision procedure. Baemin proposed creating a co-prosperity fund (140 billion won), including cutting fees for onboarded businesses using store delivery, and supporting partnership co-prosperity (160 billion won), including partial support for coupon costs for affected onboarded businesses. Coupang proposed financial support (60 billion won) for onboarded businesses, including support for advertising and marketing expense.
However, the Korea Fair Trade Commission (FTC) decided not to open the consent decision procedure, judging that the two companies' voluntary corrective plans did not meet the requirements. An official at the Korea Fair Trade Commission (FTC) said, "There are many onboarded businesses and consumers affected by the violations, and the competition-restraining effect is significant," adding, "It would have been difficult to implement (the voluntary corrective plan) quickly, and we did not see the competition restricted by the violations being sufficiently restored."
Since last year, based on the date consent decisions were approved, 7 of 21 applications to open consent decision procedures have been rejected.
Meanwhile, regarding this matter, Woowa Brothers said it was disappointed that the consent decision application to support small merchants fell through, and added it would build a delivery ecosystem where owners, customers, and the platform grow together. Coupang Eats said it would clarify the company's position through future review procedures.