Coupang to Challenge FTC Move Naming Kim Beom-seok as Group’s Controlling Person

Coupang said Tuesday it will pursue an administrative lawsuit after South Korea’s Fair Trade Commission changed Coupang’s designated “same person,” or controlling person, from a corporate entity to Coupang Inc. Chairman Kim Beom-seok, calling the move “double regulation.”

In a statement, Coupang said Coupang Inc. owns 100% of its Korean unit, and the Korean unit in turn owns 100% of its subsidiaries and sub-subsidiaries, describing the structure as transparent. It said Kim and his relatives do not hold shares in the Korean affiliates, leaving “no concern at all” about private benefit or self-dealing.

Coupang added that as a U.S.-listed company, Coupang Inc. is under strict oversight, including compliance with U.S. Securities and Exchange Commission related-party disclosure requirements. It said the Korean unit has continued to meet the conditions that allow a corporation to be designated as the controlling person, and argued that tougher regulation amounts to double regulation.

The company also said Kim’s younger brother is not an “executive” as defined under South Korea’s fair trade law — such as a CEO, director, auditor or manager — and holds no stake in the Korean affiliates. “Coupang will faithfully explain its position through an administrative lawsuit,” it said. Coupang plans to file an objection with the FTC within seven days and, if it is not accepted, proceed with litigation.

Earlier, as it pushed back against claims by civic groups that Kim should be designated as the controlling person, Coupang said the vice president named in those claims was seconded from Coupang Inc. and works on improving global logistics efficiency. It said he is not an executive under the fair trade law and holds only some Coupang Inc. listed shares, like employees at a similar level.

Under the controlling-person designation rules, the principle is to treat the natural person who effectively controls a business group as the controlling person. However, a corporation may be designated if “exception conditions” are met. Those conditions include: the scope of the business group is the same whether the controlling person is treated as an individual or a corporation; the individual who effectively controls the group does not invest in domestic affiliates other than the top company; the individual’s relatives do not invest in domestic affiliates or participate in management by serving as executives; and there are no debt guarantees or loans between the individual and relatives and the domestic affiliates.

The designation is also expected to have broader repercussions. In U.S. politics, where lawmakers are sensitive to perceived discrimination against American companies, Republican members of the U.S. House of Representatives have already increased pressure, including sending a letter of protest. The issue has also raised debate over whether it could violate the Korea-U.S. free trade agreement’s most-favored-nation obligation by treating the United States less favorably than third countries, and even the possibility of an investor-state dispute (ISD) has been mentioned.