Coupang disputes FTC ruling on Bom Kim’s control status

Coupang has filed a lawsuit to overturn the Fair Trade Commission’s decision to designate founder Bom Kim as the firm’s controlling figure, escalating tensions between the US-listed platform giant and Korea’s antitrust regulator.

Coupang filed the litigation to overturn the FTC decision with the Seoul High Court and has applied for the suspension of last week's designation.

Kim was designated as “same person,” a Korean legal term used to identify the de facto controller of a large business group, meaning the designated individual becomes subject to tighter regulatory scrutiny. Should the designation remain, Kim will be required to report the stock ownership status of himself and any relatives in Coupang Inc. and its affiliates — both in and out of Korea — to the FTC every year.

Other “same person” designations in Korea’s leading conglomerates include Samsung Electronics Chairman Lee Jae-yong, SK Group Chairman Chey Tae-won and Hyundai Motor Group Executive Chair Chung Euisun.

The FTC announced its decision to designate Coupang Inc. CEO Bom Kim as “same person” at the end of last month, noting the founder’s younger brother, Kim Yoo-seok, a Coupang vice president, effectively participated in Coupang’s management. The announcement followed an extensive investigation into a data breach that affected some 33.7 million Coupang users last year.

Coupang pushed back against the designation, noting the Korean Coupang business is wholly owned by Coupang Inc., and the Korean Coupang entity has a transparent governance structure by fully owning its subsidiaries and sub-subsidiaries.

The e-commerce firm also stressed that it already complies with related-party disclosure obligations required by the US Securities and Exchange Commission as it is listed on the New York Stock Exchange. Kim’s younger brother, it added, thus does not qualify as an executive under Korea’s antitrust law, and he has no shares in Coupang’s Korean affiliates.

Korea’s Personal Information Protection Commission recently concluded its investigation into the Coupang data breach. It has since sent the investigation results and expected disposition to the company, according to media reports Tuesday. Coupang reportedly submitted its disagreeing opinion to the authorities.

Security industry watchers expect the PIPC to announce the final result of the investigation by the end of next month. Under Korean law, companies charged with personal information leakage can face a fine of up to 3 percent of their average annual sales over the past three years.