Joo Byung-ki, chair of the Fair Trade Commission, suggested revising the exception that allows large corporate groups to designate a corporate entity as their 'same person' instead of an individual.
Following a court's intervention against the Fair Trade Commission's decision to change Coupang's designation from a corporation to Kim Beom-seok, the chair of Coupang Inc., there are growing concerns that this move may lead to stricter regulations targeting Coupang.
According to industry sources, during a meeting of the National Assembly's Political Affairs Committee on July 28, Joo stated regarding the enforcement decree related to the exception for corporate designation, "There are aspects of the enforcement decree that can be abused, and it is difficult to verify whether the special relationship of the same person is involved in management. The enforcement decree needs to be revised."
In May 2024, the Fair Trade Commission amended the enforcement decree to allow the designation of a corporation or organization as the same person instead of an individual, provided that strict separation criteria regarding family management participation, investment, and financial transactions are met.
Industry observers view Joo's comments as a direct focus on Coupang, a U.S.-listed company. In 2024, Coupang met the criteria for the exception, but in May of this year, the Fair Trade Commission changed the designation back to Kim Beom-seok, citing violations of the exception criteria due to the activities of Kim's brother, Kim Yoo-seok, the company's vice president.
Coupang has contested this decision, filing a lawsuit to cancel the designation and seeking a stay of execution. On July 14, the Seoul High Court partially granted Coupang's request for a stay, suspending the effects of the decision to designate Kim as the same person and the requirement for him to submit documents. The suspension will last until 30 days after the first-instance ruling in the main lawsuit.
As a result of this decision, Kim is temporarily relieved from various disclosure and reporting obligations to the Fair Trade Commission that come with being designated as the same person. If designated, he would be required to report and publicly disclose the stock ownership status of himself, his spouse, and relatives within the fourth degree of kinship annually.
In this context, Coupang has expressed concerns that being designated as the same person exposes them to risks of shareholder class action lawsuits and criminal penalties. Under U.S. Securities and Exchange Commission (SEC) regulations, disclosures are required regarding transactions involving executives and immediate family members. If information exceeding SEC disclosure requirements is made public under the Fair Trade Act, it could lead to irreparable harm even if they win the main lawsuit.
As the legal dispute over the Fair Trade Commission's decision continues, there are also concerns about potential backlash from U.S. lawmakers. On July 1, the U.S. House Judiciary Committee released a report claiming that the South Korean government discriminates against U.S. companies, including Coupang. The report dedicates more than half of its content to the Coupang issue, asserting that such discriminatory treatment violates the Korea-U.S. trade agreement. The following day, the White House stated that "Coupang has been targeted by the Yoon Suk-yeol administration."
Given this situation, if the revision of the exception for the same person designation is pursued with a direct focus on Coupang, it could escalate domestic regulatory issues into a U.S.-Korea trade dispute.
Industry insiders noted, "The exception for the same person designation was a mechanism to ensure flexibility in the system's operation, but if it is revised again, it could effectively reverse regulations based on the Coupang case. If the Fair Trade Commission narrows the exceptions, companies will inevitably worry about criminal risks and disclosure burdens, which could be perceived as uncertainty in the Korean market by foreign investors."
* This article has been translated by AI.
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