After the holidays, the food·retail sectors switch to ‘audit mode’···Top agenda items include Coupang, Homeplus, and delivery apps - 경향신문

This article was translated by an AI tool. Feedback Here.

Police and the Ministry of Employment and Labor executed a search-and-seizure warrant at Coupang’s logistics center in Gwangju, Gyeonggi Province, on the 2nd in connection with a forklift entrapment accident that occurred on August 23. The photo shows Coupang’s logistics center in Gwangju, Gyeonggi Province, at the time. Reporter Moon Jae-won

Shortly after the Chuseok holidays end, the National Assembly’s audit of government agencies will begin. The retail·food industries are moving into full audit-prep mode as well. From the 6th to the 27th of next month, multiple standing committees including the State Affairs Committee, the Trade, Industry, Energy, and SMEs Committee, the Agriculture, Food, Rural Affairs, Oceans and Fisheries Committee, the Science, ICT, Broadcasting and Communications Committee, and the Climate, Energy, Environment and Labor Committee are expected to focus on key issues such as matters related to Coupang, the rehabilitation of Homeplus, delivery app fees, collusion in the food industry, and industrial accidents.

The company facing the largest number of issues this year is Coupang. The Korea Fair Trade Commission launched an on-site investigation into alleged violations of the Large-Scale Distribution Transactions Act to verify suspicions that Coupang unfairly passed the cost of price discount coupons on to suppliers. Coupang refused to cooperate, arguing it had not received written prior notice seven days before the probe, and filed a suit to annul the on-site investigation decision along with an application to suspend its execution. It was highly unusual for KFTC investigators to withdraw without conducting an on-site probe due to a target company’s refusal.

On the 23rd, the Seoul High Court dismissed Coupang’s application for suspension of execution, thereby reviving the effect of the KFTC’s on-site investigation. The KFTC plans to proceed with procedures to impose a fine for obstructing the probe and, if necessary, to carry out another on-site investigation. The lawfulness of the on-site investigation decision itself will be addressed separately in the main suit.

Fair trade disputes involving Coupang have also surged. According to data Rep. Lee Kang-il of the Democratic Party, a member of the State Affairs Committee, received from the Korea Fair Trade Mediation Agency, Coupang-related dispute mediation filings totaled 35 for all of 2020, but reached 438 through August this year more than a 12-fold increase. They account for 19.4% of all filings in the fair trade domain this year.

Controversy over the massive personal data breach that occurred late last year is still ongoing. In June, the Personal Information Protection Commission imposed an administrative fine of 624.681 billion won and a penalty of 1.68 million won on Coupang in connection with the leakage of personal information of about 37.55 million people. In addition, the Consumer Dispute Settlement Commission under the Korea Consumer Agency ruled that consumers who applied for collective dispute mediation should be compensated 100,000 won each, but Coupang did not accept the decision.

Safety issues at logistics sites including a fire at the Incheon logistics center in July and a forklift entrapment accident at the Gwangju, Gyeonggi, logistics center in August are also expected to be placed on the audit chopping block. The Science, ICT, Broadcasting and Communications Committee adopted Brett Anthony Mattis, Coupang’s Chief Information Security Officer (CISO), as a witness. Accountability for large-scale personal data leaks at companies beyond Coupang including TVING, where about 39.54 million user accounts were compromised is also likely to be pursued during the audit.

The controversy surrounding Coupang has spilled over into a U.S.Korea trade and diplomatic issue. In an interim report released in July, the U.S. House Judiciary Committee, led by the Republican Party, argued that investigations and regulations of Coupang by Korean government agencies discriminate against a U.S. company, a claim the Korean government refuted. This issue raised by U.S. politicians is also expected to be addressed during the audit.

On the 13th of last month, when 67 Homeplus stores that had been temporarily closed officially reopened, customers waited to check out after making purchases at a Homeplus store in Seoul. Yonhap News

Homeplus, which is undergoing corporate rehabilitation, is also a core agenda item. With the Seoul Bankruptcy Court approving Homeplus’s rehabilitation plan on the 2nd, the company has averted the immediate risk of liquidation. Among 37 stores slated for closure, Homeplus plans to sell 19 self-owned locations by February 2028 to prioritize repayment of 1.3 trillion won in senior secured debt owed to Meritz Financial Group, and to pursue M&A for its hypermarket division.

However, there is a long road to normalization. In a meeting with the labor union on the 15th, Homeplus explained that recent sales were about 40% of target. Accumulated unpaid wages from December last year through August this year amount to 387.1 billion won. To prioritize payment of invoices for Chuseok seasonal goods supplied by vendors, Homeplus decided to split-pay unpaid July wages on the 23rd and 30th of this month. No clear acquisition candidate has yet emerged for the M&A.

During the audit, measures to protect workers, suppliers, and in-store merchants, along with the accountability of major shareholder MBK Partners, are expected to be focal points. The Trade, Industry, Energy, and SMEs Committee adopted MBK Partners Chairman Kim Byung-ju as a witness for the Ministry of SMEs and Startups audit on the 7th of next month.

Delivery app issues, a perennial audit topic, are also expected to be addressed this time. The Korea Fair Trade Commission is reviewing so-called ‘most-favored-nation’ allegations that Baedal Minjok and Coupang Eats required merchants to offer prices and terms no less favorable than on other delivery apps. Earlier, Baemin proposed a 300 billion won co-prosperity plan over three years, and Coupang proposed 60 billion won over four years, applying for a consent decree, but in June the KFTC declined and decided to proceed with a review on the merits. Brokerage and delivery fee burdens, as well as transaction terms between platforms and merchants, are also likely to be raised again during the audit.

Headquarters of Woowa Brothers in Songpa-gu, Seoul, on the 22nd, when the Korea Fair Trade Commission announced it had received and begun reviewing a corporate combination notification for Uber of the United States and Germany’s Delivery Hero (DH), the parent of Baedal Minjok. Yonhap News

Uber’s push to acquire Germany’s Delivery Hero (DH) is also drawing attention. On the 22nd, the Korea Fair Trade Commission began a pre-merger review of the corporate combination application submitted by Uber to acquire DH, the largest shareholder of Woowa Brothers, operator of Baemin. If the deal is consummated, Uber, which operates a taxi-hailing business domestically, would indirectly secure management control of Baemin, Korea’s largest food delivery platform. The KFTC will examine how integrated memberships between taxi-hailing and delivery apps, advertising·promotions, and data integration affect market competition, rival businesses, users, and merchants.

In the food industry, collusion cases involving raw materials such as sugar, flour, starch, and starch syrup are considered the biggest issue. According to data Rep. Yoon Joon-byung of the Democratic Party, a member of the Agriculture, Food, Rural Affairs, Oceans and Fisheries Committee, received from the Korea Fair Trade Commission, related sales in five food-related collusion cases caught this year total 14.9866 trillion won, with surcharges amounting to 1.8178 trillion won. The committee adopted as witnesses Cho Young-sik, Vice President of CJ CheilJedang, and Lee Woon-ik, CEO of Samyang Corporation, for the Ministry of Agriculture, Food and Rural Affairs audit on the 7th of next month. The KFTC is also investigating price-fixing allegations for sauces and pastes involving CJ CheilJedang, Daesang, Sempio, Pulmuone, and Sajo Daerim. Fatal worker accidents that occurred this year at companies including Ourhome and Maeil Dairy are also expected to be pointed out during the audit.

A Starbucks in Seoul on June 22, when Starbucks Korea closed at 3 p.m. for employee training on historical awareness and social sensitivity. Reporter Lee Jun-heon

The controversy over Starbucks Korea’s ‘5·18 Tank Day’ marketing is also expected to be mentioned during the audit. On May 18, the anniversary of the May 18 Democratization Movement, Starbucks ran a promotion using phrases such as ‘Tank Day’ and ‘Thump on the desk’ in its materials, drawing criticism that they evoked the May 18 Democratization Movement and the death-by-torture case of Park Jong-cheol. Although Shinsegae Group Chairman Chung Yong-jin issued a public apology in person, a police investigation is still underway.

Issues related to big-box retailer regulations may also become points of contention in the audit. Under the current Act on the Development of the Distribution Industry, big-box retailers face mandatory closure days and restrictions on late-night operations. The National Assembly is discussing bills that would ease operating hour restrictions and allow dawn delivery for big-box stores.

The Korea Fair Trade Commission recently conducted additional probes into CJ Olive Young and Daiso regarding possible violations of the Large-Scale Distribution Transactions Act, including unfair returns and cost shifting to suppliers. Musinsa is also under investigation for potential violations related to supplier transactions. These matters are expected to draw criticism during the audit.