Attention is focusing on the fallout as the Korea Fair Trade Commission changed Coupang's "same person" (controlling owner) from the corporation Coupang Inc. to individual Bom Kim, chair of Coupang Inc. It is the first case in about 40 years since the system was introduced in 1986 that a U.S. corporate CEO has been designated as the same person. Business circles see it as a symbolic shift showing Coupang moving beyond the existing platform-corporations frame and into the traditional conglomerate regulatory regime.
According to related industries on the 29th, after surpassing 5 trillion won in asset in 2021 and being designated for the first time as a public disclosure-targeted business group, Coupang has until now maintained the corporation, not the natural person Chair Kim, as the same person. That was because of the particularity of being a business group controlled by a founder with foreign nationality, along with the consideration that it met the exception requirements under the Enforcement Decree of the Monopoly Regulation and Fair Trade Act.
To designate a corporation as the same person, the following must be met: ▲ there is no difference in the scope of the business group compared with designating a natural person as the same person ▲ neither the natural person nor relatives hold domestic affiliates' equity ▲ relatives do not participate in the management of domestic affiliates ▲ there is no debt guarantee or fund lending and borrowing relationship between the natural person or relatives and domestic affiliates. If even one of these is judged not to be met, the Korea Fair Trade Commission (FTC) may change the same person to a natural person and designate accordingly.
Business circles have consistently argued that applying the exception is inappropriate given that Chair Kim is exercising de facto control. Recently, as it became known that Vice President Kim Yu-seok, Chair Kim's younger brother, received about 14 billion won over the past four years in salary and stock compensation, the mood shifted.
On this day, as it designated Chair Kim as the same person, the Korea Fair Trade Commission (FTC) said, "In on-site inspections conducted by the FTC this year, Coupang was determined not to meet the Enforcement Decree's exception requirements," and added, "Vice President Kim corresponds to almost the highest grade within Coupang, similar to the representative director grade of key affiliates. Annual compensation and treatment are at a level comparable to registered executives." It also said, "Facts were confirmed such as effectively exerting influence on concrete directions of business execution regarding major businesses."
◇ Scope of affiliates to widen and regulations on internal transactions expected to expand
If Chair Kim is designated as the same person, the biggest change will come in determining the scope of related parties and affiliates.
When a corporation is the same person, the scope of related parties is limited to affiliates in which Coupang holds at least 30% equity or exercises de facto control. In contrast, when a natural person becomes the same person, there arises the possibility of re-examining the affiliate scope based on related parties such as the person, spouse, and relatives within the fourth degree. This means that a company controlled by or effectively influenced by relatives could be subject to review for inclusion as an affiliate. The disclosure burden related to related-party transactions increases, and checks on equity structures and internal transactions are also strengthened.
The scope for applying regulations on funneling work to specific parties also broadens. If there are transactions between companies related to Chair Kim or relatives and Coupang affiliates, the review scope for regulations on improper private interest could be expanded.
Another change is that the responsibility to submit designation materials is directly imposed on Chair Kim personally. Each year, materials including the status of relatives and equity structures must be submitted to the Korea Fair Trade Commission (FTC), and intentional omission or false submission could be subject to criminal punishment.
Industry watchers say the move also serves to align regulatory fairness with domestic corporations. An industry official said, "Since most major conglomerate groups in Korea have their controlling owner designated as the same person and are regulated accordingly, it is difficult to recognize a separate exception only for Coupang." This is because there is a precedent in which Lee Hae-jin, founder of fellow platform corporations Naver, was designated as the same person in 2017, even though his equity stake is only about 4%.
◇ Possibility of U.S.-Korea trade friction also raised... Coupang says it will explain through an administrative suit
Some suggest that because Coupang Inc., Coupang's parent company, is a U.S. corporation, this could lead to U.S.-Korea trade friction or reduced investment. The U.S. side has continued to raise issues, perceiving the Korean government's investigation into Coupang's large-scale personal data leak as discrimination against U.S. corporations. An industry official said, "If a precedent is created in which Korea's regulatory framework is applied even to overseas-listed companies, it could send a negative signal that the market is unpredictable to foreign capital, undermining Korea's investment appeal."
Coupang decided to file an administrative suit. Coupang said, "Coupang Inc. owns 100% of the Korean Coupang corporation, and the Korean Coupang also owns 100% of its subsidiaries and sub-subsidiaries under a transparent governance structure, and Chair Kim and relatives do not hold equity in Korean affiliates, so there is no concern at all about improper private interest," adding, "As a U.S.-listed company, we are under strict oversight, complying with related-party disclosure obligations required by the Securities and Exchange Commission (SEC), and the Korean Coupang corporation has consistently met the exception conditions for same-person designation."
It added, "Chair Kim's younger brother is not an executive (representative director, director, auditor, general manager, etc.) under the Fair Trade Act and does not hold equity in Korean affiliates," and said, "We will faithfully explain through future administrative litigation."