FTC rejects Baemin, Coupang Eats self-corrective proposals following allegations of unfair practices
State-run antitrust regulator rejected 300 billion won ($196 million) worth of self-corrective consent decrees proposed by Baedal Minjok, or Baemin, and Coupang Eats, leaving the major delivery platforms exposed to significant fines.
A restaurant window in Seoul features stickers indicating that the establishment allows deliveries through Coupang Eats and Baedal Minjok.NEWS1
The state-run antitrust regulator rejected 300 billion won ($196 million) worth of self-corrective consent decrees submitted by two major delivery platforms — Baedal Minjok, also known as Baemin, and Coupang Eats — the Fair Trade Commission (FTC) said on Thursday.
The decision, reached during a plenary session on June 10, leaves both companies exposed to significant fines after they were accused of leveraging their market dominance to force restaurant owners to agree to unfair trading terms.
Had the FTC accepted the decrees, the cases would have been resolved without a formal determination of whether the companies violated the law.
Both Baemin and Coupang Eats have been accused of requiring merchants to enter into contracts withterms no less favorable than those provided by their rival platforms, a practice known as the “most favored nation” (MFN) principle.
Baemin also faces allegations that it gave preferential treatment to its in-house Baemin Delivery service to induce merchants operating their own delivery services to join the platform's network.
Meanwhile, Coupang has been accused of tying its Coupang Eats service to its monthly paid Wow membership.
Delivery motorcycles are parked in Gangnam District, southern Seoul, on May 5, 2023.YONHAP
Baemin sought a consent decree covering all allegations, while Coupang pursued only one regarding the MFN clause.
The two companies proposed corrective measures, including lower commission rates for merchants who use their delivery services and subsidies to cover delivery costs. Baemin pledged 300 billion won over three years to the measures, and Coupang offered 60 billion won over four years.
The FTC, however, concluded that it would be improper to resolve the cases through consent decrees, given their gravity and impact on competition.
“The case affects a large number of merchants and consumers, and its anticompetitive effects are significant,” said Jeong Hee-eun, the director of the Anti-Monopoly Investigation Bureau at the FTC. “The commission determined that the proposed corrective measures alone would be insufficient to restore competition and compensate the loss among affected parties.”
The decision means that both companies will now return before the FTC’s plenary review, which will determine the extent of their violations and penalties.
Baemin could face fines ranging from 239 billion won to 510 billion won, and Coupang could be penalized 25 billion won to 42 billion won for imposing the MFN clause, according to estimates by FTC examiners. The figures were based on statutory penalty rates applied to the relevant sales associated with each allegation.
Lawmakers urge stern punishment against Coupang Eats and Baedal Minjok over their alleged unfair market practices during a press conference at the National Assembly in western Seoul on June 18.YONHAP
In the case involving the claim that Coupang bundled its e-commerce membershipand delivery services, the related sales amounted to 5.26 trillion won. Accordingly, it could face an additional fine of up to 210.4 billion won.
“[The company] will faithfully explain its position through the upcoming review process,” Coupang Eats said.
“The scale of the proposed support package was unprecedented, even compared to previous cases involving approved consent decrees,” a representative from Woowa Brothers said. Woowa Brothers operates Baemin. “We regret that the consent decree proposal, which would have provided direct support to small business owners, was rejected.”
Previously, Google entered consent decree proceedings over allegations that it tied the YouTube Music service to the YouTube Premium subscription. The company proposed a service option that exempts the music offering and decided to contribute a 30 billion won fund to the state-run education broadcaster EBS as part of its corrective measures.
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
