Dispute deepens as US investors seek probe into 'discriminatory' actions against Coupang

This file image shows Coupang delivery trucks parked at a last-mile logistics center in Seoul on December 28. YONHAP

SEOUL, January 23 (AJP) - The dispute between Coupang and South Korean regulators appears to have turned into a potential diplomatic issue after the e-commerce giant's U.S. investors urged the Trump administration to investigate Seoul over alleged unfair trade practices.

Greenoaks Capital and Altimeter Capital, the two largest shareholders of the New York-listed company, filed a petition on Thursday, requesting the Office of the U.S. Trade Representative (USTR) launch an investigation under Section 301 of the Trade Act of 1974. Simultaneously, the two submitted a Notice of Intent to initiate arbitration against the South Korean government under the investor-state dispute settlement (ISDS) provisions of the Korea-United States Free Trade Agreement (KORUS FTA).

The dual filings are seen as a bold move in the investors' strategy. By citing Section 301, a powerful trade tool that allows a U.S. president to impose retaliatory tariffs, the shareholders are seeking to leverage U.S. President Donald Trump's "America First" mantra to pressure Seoul. The USTR must decide within 45 days whether to launch a formal investigation.

In a joint petition, the investors alleged that the South Korean government is engaging in "discriminatory and expropriatory" actions against Coupang following a data breach detected in November last year. Greenoaks and Altimeter argued that the aggressive regulatory probes, which include threats to suspend the company's business license, are politically motivated attacks intended to dismantle a successful American firm.

"A multi-year pattern of selective government enforcement and escalating regulatory pressure singling out Coupang, marked by extraordinary investigations, audits, and on-site inspections that appear to far exceed the regulatory scrutiny imposed on domestic Korean and Chinese competitors," the joint petition stated.

Greenoaks and Altimeter added that the South Korean government's actions against Coupang appear intended to "target, disable, and destroy an innovative American competitor," urging the USTR to consider retaliatory duties on South Korean exports if the alleged harassment continues.

The investors also claim that by targeting Coupang, the South Korean government is inadvertently aiding Chinese e-commerce platforms compete for market share in the country, citing remarks by South Korean President Lee Jae-myung and Fair Trade Commission Chairman Joo Byung-ki as evidence of hostility toward the U.S.-backed company.

South Korean officials have moved quickly to reject these claims, insisting the investigation is a legitimate response to a security breach that exposed the personal data of nearly 34 million citizens. Prime Minister Kim Min-seok, currently visiting the United States, personally addressed the controversy during a lunch with U.S. lawmakers in Washington, D.C., on Friday.

"There is absolutely no discrimination against Coupang," Kim told the legislators. "The trust between South Korea and the U.S. is deep enough that there is no need to worry about discriminatory treatment."

Kim drew a parallel to the "Georgia incident" involving Korean workers in the U.S., noting that Seoul did not view that event as national discrimination. He explained that the government is not taking measures against Coupang simply because it is an American company, seeking to draw a line under suspicions raised by the U.S. tech sector. This follows earlier diplomatic efforts by Trade Minister Yeo Han-koo, who reportedly met with U.S. Trade Representative Jamieson Greer in Washington last week to clarify Seoul's position.

The diplomatic maneuvering comes amid intense domestic scrutiny of Coupang. Public sentiment has plunged following a series of parliamentary hearings in which interim CEO Harold Rogers was criticized for his "audacious" behavior. Rogers, who reportedly refused to use official interpretation services or provide contact information during questioning, fled the country on January 13 just before a travel ban could be imposed.

Fueling public anger is further controversy over the company's compensation plan for the data breach. Distributed starting January 15, the package offers 50,000 won ($35) in purchase vouchers, but consumers have criticized the offer as a "marketing tactic." Users note that the vouchers are largely limited to Coupang's luxury and travel subsidiaries rather than its core delivery service.

The South Korean government has formed a joint task force involving the Ministry of Justice and the Ministry of Trade, Industry and Energy to prepare for the potential arbitration and the USTR's decision on the petition.
Park Sae-jin Reporter swatchsjp@ajunews.com

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