Seoul, Jan 23 Two US investors in e-commerce giant Coupang notified the South Korean government of their intent to bring arbitration claims against it over what they called "discriminatory" acts toward the US-listed firm, and requested a US government probe into the matter.
Greenoaks Capital Partners and Altimeter Capital Management took the actions, decrying South Korean authorities' investigations into Coupang following revelations in November about a massive customer data leak, according to documents that their legal representative, Covington & Burling LLP, submitted to the two governments, reports Yonhap news agency.
The Seoul government, along with experts, has been conducting a probe into the incident, in which about 33.7 million customers are believed to have been affected. Coupang has claimed a perpetrator accessed data from only about 3,000 of the accounts in question.
In a notice addressed to President Lee Jae Myung and Chung Hong-sik, the deputy minister for international legal affairs at Seoul's justice ministry, the U.S. investors expressed their intent to file arbitration claims under the South Korea-U.S. free trade agreement. They hold equity interests in Coupang valued at more than US$1.5 billion.
In a separate document sent to the Office of the U.S. Trade Representative (USTR), the investors requested that Washington investigate what they said were "unreasonable" and "discriminatory" acts by the Seoul government against Coupang, and impose "appropriate" trade remedies. They cited Section 301 of the Trade Act of 1974.
The two companies claimed that South Korea's policy enforcement and regulatory pressure regarding Coupang appear to "far exceed" the scrutiny imposed on its 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 press release.
Characterising the data breach as a "limited and constrained" incident, they accused the South Korean government of making "false and defamatory" claims, and senior ruling party officials of an "apparent attempt to inflame Korean public opinion and provide cover for efforts to eliminate Coupang and benefit domestic and Chinese competitors."
They also claimed that the Seoul government's "targeted and hostile interference" over the data breach has led to billions of dollars in lost market capitalisation.
"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," they said.
In the notice to the Korean government, the investors claimed that as Coupang was threatening the historical dominance of its Korean and Chinese competitors, the Seoul government began "weaponising the administrative power of the state, and even acting outside its sovereign capacity, to disrupt Coupang's operations."
In the document to the USTR, the investors also pointed out that South Korean Prime Minister Kim Min-seok urged state regulators in December to approach enforcement against Coupang for the data breach "with the same determination used to wipe out mafias.
The company, founded by Korean American entrepreneur Kim Bom-suk, also known as Bom Kim, generates about 90 per cent of its sales in South Korea.
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