Korea Fair Trade Commission is set to investigate unfair practice of Korea’s social commercial companies including Coupang, WeMakePrice and Ticket Monster along with some delivery app makers, according to multiple local media outlets on Wednesday.
The antitrust watchdog is expected to probe into commission and payment issues between the social commercial giants and their partner companies.
The latest investigation came as a lawmaker Kim Young-hwan of the New Politics Alliance for Democracy called for the probe into the unfair practice during the National Assembly meeting on Wednesday.
Kim said that “The unpaid amount combined by social commerce companies stands at around 500 billion won.”
“Small stores using delivery apps including Woowa Brothers should pay 10 percent commission to the delivery app as well as 10 percent additional tax. This may led consumers to buy delivery food at a higher price,” he added.
He also said that “With the use of the Internet fast rising and the penetration of smartphone increasing, the so-called “Cyber-mall” market is expanding with the similar size to off-line market. However as most regulations and investigations are focused on off-line market, the cyber market is vulnerable to more risk.”
In regards with this, Jung Jae-chan, chief of Korea Fair Trade Commission, said “Though we have limited personnel, we will try our best to make an investigation against this issue.”
This probe is the latest by the commission among a series of similar investigations for the past yeats in the Korean retail sector.
In April, the antitrust watchdog said it made a strong investigation against Korea’s large online shopping malls including Ebay Korea running Auction and GMarket as well as 11st for unfair practice with partner companies.
The probe had come as the Korea Federation of Small and Medium Business released its report on “Survey on open market unfair practice,” stating that eight out of 10 sellers within open market said they experienced unfair practice such as pressure on advertising.
Also, last April, Korea Fair Trade Commission carried out an investigation into the social commerce companies as well as online shopping malls with consumer complaints about fake products increasing.
The antitrust watchdog said it took action to strongly regulate chronic problems in the online shopping industry including the purchase of fake goods and bubbling discount rate. Korea’s big three social commerce companies Coupang, WeMakePrice and Ticket Monster were included in the list along with Korea’s large online shopping malls including GS Shop and Lotte Home Shopping.
Ticket Monster was accused of selling fake shoes by the prosecution in 2012 while WeMakePrice also faced sanctions from Korea Fair Trade Commission for accusing its rival Coupang on YouTube advertising.
Market watchers say, “Social commerce market has seen a fast growth for the last years. It already stood at 3 trillion won last year, up from 50 million in 2010. Repeated false adverting, fake products and controversies on unfair practice may reduce consumer credit.”
Early this year, the Korea Fair Trade Commission beefed up its efforts to protect consumers in cross-border purchase and social commerce.
In the revised plan, when consumers purchase products, sellers should provide information about the products, types and price on the payment window. Even after the free use period is over, they still have to continue to provide the information for consumers.
South Korea’s social commerce market rose to 5.5 trillion won, up from 50 billion won in 2010. With the increasing mobile shopping users, the figure is expected to hit 6 trillion won this year, analysts said. In the U.S., the largest market, social commerce is expected to garner $14 billion in sales in 2015.
