SEOUL, South Korea — Two U.S. investors in e-commerce giant Coupang have notified the South Korean government of their intent to file arbitration claims, alleging discriminatory actions against the U.S.-listed company, and have also urged U.S. authorities to investigate the matter.
Greenoaks Capital Partners and Altimeter Capital Management said South Korean authorities unfairly targeted Coupang through investigations that followed revelations in November about a major customer data breach, according to documents submitted to both governments by their legal representative, Covington & Burling LLP, Yonhap News Agency reported.
South Korean authorities and independent experts have been probing the data breach, which is believed to have affected as many as 33.7 million customers. Coupang has maintained that a perpetrator accessed data from only about 3,000 accounts.
In a notice addressed to President Lee Jae Myung and Chung Hong-sik, deputy minister for international legal affairs at the Justice Ministry, the investors said they plan to file arbitration claims under the South Korea–U.S. free trade agreement. The two firms hold equity stakes in Coupang valued at more than $1.5 billion.
In a separate submission to the Office of the U.S. Trade Representative, the investors called on Washington to investigate what they described as “unreasonable” and “discriminatory” actions by the South Korean government against Coupang and to impose “appropriate” trade remedies. They cited Section 301 of the Trade Act of 1974.
The investors argued that regulatory enforcement and policy pressure on Coupang “far exceed” the scrutiny applied to domestic Korean and Chinese competitors.
“As Coupang took increasing market share from Korean and Chinese competitors, enforcement actions across the Korea Fair Trade Commission, National Tax Service, Ministry of Employment and Labor, Financial Supervisory Service, and others increased, resulting in hundreds of audits, inspections, and raids and more penalties against Coupang than any other company in Korean history,” they said in a joint statement.
Describing the data breach as a “limited and constrained” incident, the investors accused the South Korean government of making “false and defamatory” claims and alleged that senior ruling party officials made an “apparent attempt to inflame Korean public opinion and provide cover for efforts to eliminate Coupang and benefit domestic and Chinese competitors.”
They said the government’s “targeted and hostile interference” following the breach has wiped out billions of dollars in market capitalization, losses they said were borne directly by U.S. shareholders.
“These losses have been borne directly by U.S. shareholders — including individual investors and institutional funds holding the retirement savings of millions of American workers,” the investors said.
In their notice to the South Korean government, the firms claimed that as Coupang began threatening the long-standing dominance of Korean and Chinese rivals, authorities started “weaponising the administrative power of the state, and even acting outside its sovereign capacity, to disrupt Coupang’s operations.”
In their submission to U.S. trade officials, the investors also cited comments made in December by Prime Minister Kim Min-seok, who urged regulators to pursue enforcement against Coupang over the data breach “with the same determination used to wipe out mafias.”
Coupang, founded by Korean American entrepreneur Kim Bom-suk, also known as Bom Kim, generates about 90 percent of its revenue from the South Korean market. (Source: IANS)
