Fair Trade Commission in Sejong City. [Photo by Yu Dae-gil]
The top five delivery companies in South Korea have been penalized by the Fair Trade Commission (FTC) for repeatedly abusing their power over subcontractors. With these companies controlling over 90% of the domestic delivery market, the sanctions are seen as a significant step toward addressing unfair practices across the industry.
On May 18, the FTC announced that it would impose a total fine of 3.08 billion won (approximately $30.8 million) on five delivery firms—Coupang Logistics Service, CJ Logistics, Lotte Global Logistics, Hanjin, and Logen—for establishing unfair contract terms and failing to issue written contracts when outsourcing services.
The FTC, in collaboration with the Ministry of Employment and Labor and the Ministry of Land, Infrastructure and Transport, conducted surprise inspections last August due to concerns that unfair subcontracting practices in the delivery sector were contributing to safety incidents, including heat-related illnesses among workers. The current investigation is based on findings from those inspections.
According to the FTC, the five delivery companies hold a combined market share of 90.5%. They leveraged their dominant position to impose unfair subcontracting conditions, including clauses that shifted liability for safety incidents to subcontractors, retained interest earnings during cash collateral periods, and required subcontractors to compensate for damages resulting from disputes.
The number of identified unfair contract clauses included 1,155 cases for Coupang, 2,306 for CJ, 3,609 for Lotte, 1,664 for Hanjin, and 452 for Logen. The fines related to these unfair clauses were 567 million won for Coupang, 540 million won for CJ, 483 million won for Lotte, 546 million won for Hanjin, and 378 million won for Logen.
Kim Dong-myung, head of the FTC's New Business Subcontracting Investigation Division, noted that Coupang's failure to adequately amend contracts after being flagged contributed to its penalty. In contrast, Lotte cooperated during the investigation and made necessary corrections, resulting in a reduction of its fine.
The investigation also revealed that the five delivery companies failed to comply with the requirement to issue written contracts. The FTC explained that issuing written contracts detailing subcontracting terms is essential to prevent unnecessary disputes between contracting parties.
These companies did not issue written contracts for a total of 2,055 agreements related to collection, delivery, and logistics terminal operations until the start of service. In some cases, such as Lotte, contracts were issued only after 761 days.
As a result, the FTC decided to impose a fine of 600 million won for violations related to the failure to issue written contracts, excluding Logen. The fines for non-issuance of contracts were 192 million won for Coupang, 108 million won for CJ, 150 million won for Lotte, and 150 million won for Hanjin.
Kim stated, "Subcontractors had no choice but to comply with unreasonable clauses to meet performance targets. This decision is expected to improve the unfair practices faced by subcontractors and alleviate their workload."
On May 18, the FTC announced that it would impose a total fine of 3.08 billion won (approximately $30.8 million) on five delivery firms—Coupang Logistics Service, CJ Logistics, Lotte Global Logistics, Hanjin, and Logen—for establishing unfair contract terms and failing to issue written contracts when outsourcing services.
The FTC, in collaboration with the Ministry of Employment and Labor and the Ministry of Land, Infrastructure and Transport, conducted surprise inspections last August due to concerns that unfair subcontracting practices in the delivery sector were contributing to safety incidents, including heat-related illnesses among workers. The current investigation is based on findings from those inspections.
According to the FTC, the five delivery companies hold a combined market share of 90.5%. They leveraged their dominant position to impose unfair subcontracting conditions, including clauses that shifted liability for safety incidents to subcontractors, retained interest earnings during cash collateral periods, and required subcontractors to compensate for damages resulting from disputes.
The number of identified unfair contract clauses included 1,155 cases for Coupang, 2,306 for CJ, 3,609 for Lotte, 1,664 for Hanjin, and 452 for Logen. The fines related to these unfair clauses were 567 million won for Coupang, 540 million won for CJ, 483 million won for Lotte, 546 million won for Hanjin, and 378 million won for Logen.
Kim Dong-myung, head of the FTC's New Business Subcontracting Investigation Division, noted that Coupang's failure to adequately amend contracts after being flagged contributed to its penalty. In contrast, Lotte cooperated during the investigation and made necessary corrections, resulting in a reduction of its fine.
The investigation also revealed that the five delivery companies failed to comply with the requirement to issue written contracts. The FTC explained that issuing written contracts detailing subcontracting terms is essential to prevent unnecessary disputes between contracting parties.
These companies did not issue written contracts for a total of 2,055 agreements related to collection, delivery, and logistics terminal operations until the start of service. In some cases, such as Lotte, contracts were issued only after 761 days.
As a result, the FTC decided to impose a fine of 600 million won for violations related to the failure to issue written contracts, excluding Logen. The fines for non-issuance of contracts were 192 million won for Coupang, 108 million won for CJ, 150 million won for Lotte, and 150 million won for Hanjin.
Kim stated, "Subcontractors had no choice but to comply with unreasonable clauses to meet performance targets. This decision is expected to improve the unfair practices faced by subcontractors and alleviate their workload."
* This article has been translated by AI.
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