The Korea Fair Trade Commission (KFTC) has imposed a final fine of 162.8 billion won ($118.2 million) on Coupang for manipulating search ranking algorithms to favor its private brand (PB) products.
According to the retail industry, the KFTC sent a resolution letter to Coupang on Aug. 7, outlining the sanctions for violating the Fair Trade Act. The resolution included an order to cease activities that misled consumers into believing PB products were superior through algorithm manipulation and employee reviews, thereby inducing purchases.
The final fine amount of $118.2 million, which is the largest ever imposed in the domestic retail industry in South Korea.
Previously, in June, the KFTC decided on a fine of $101.6 million based on sales figures from Feb. 2019 to July. 2023, during which the investigation was conducted.
However, even after July last year, Coupang did not stop using the problematic algorithm and employee review practices.
As a result, the KFTC reviewed the sales data from that period and decided to increase the fine by an additional $16.5 million. This extra amount was added to the original fine, based on the continued use of these practices up until the latest review.
Coupang is accused of manipulating the rankings of over 60,000 products in the ‘Coupang Ranking’ through algorithm adjustments. Additionally, it is alleged that over 2,000 Coupang employees were mobilized to write at least 70,000 employee reviews for PB products.