US House Committee Accuses South Korea of 'Discriminatory Attacks' on American Companies

By Song Sang-ho

WASHINGTON, July 1 (Yonhap) -- A U.S. House committee on Tuesday released a report accusing South Korea of "discriminatory attacks" on e-commerce giant Coupang Inc. and other American companies, claiming the Asian country's treatment of them violates last year's bilateral trade deal.

The House Judiciary Committee issued the 35-page interim staff report, titled "Closed for Competition: South Korea's Discriminatory Attacks on American-owned Businesses," as Coupang has faced public criticism and investigations for a massive data leak in South Korea.

The report particularly zeroes in on South Korean authorities' probes into the data breach case of Coupang, which it says has been a "consistent target" of the Seoul government, at a time when Seoul wants to ensure that the case does not get in the way of the two countries' cooperation on security, trade and other fronts.

"South Korea has a long history of engaging in economic discrimination against foreign companies," it says.

"These practices include coercive investigation tactics, overly burdensome regulatory requirements, and massive fines and penalties intended to punish American companies and make it harder for them to effectively compete against Korean companies," it added.

The report argues that South Korea's treatment of U.S. businesses is part of a larger pattern of foreign governments "weaponizing" their broad discretion under competition laws and other regulatory regimes to "shield their domestic industries from U.S. competition."

"(It) directly violates its recent trade agreement with the United States," it says, referring to the agreement specified in a joint fact sheet released in November to outline trade and security agreements between South Korea and the United States.

The fact sheet states that the two governments commit to ensure U.S. companies are not discriminated against and do not face unnecessary barriers under laws and policies concerning digital services.

The report cites Coupang as a case of South Korea's "protectionist" practice, claiming that the company's rapid growth and competitive success have made it a "consistent target" of the South Korean government.

The argument came amid lingering concerns that Coupang's extensive lobbying activities in the U.S. capital could further escalate diplomatic tensions over South Korea's investigations into the data leak case believed to have affected more than 33 million users.

Lobbying Disclosure Act reports on the Senate website showed in April that Coupang had spent more than US$1 million on lobbying activities in the U.S., including efforts involving the White House and Congress, since its data leak scandal erupted in November.

"South Korea has repeatedly subjected Coupang to overly aggressive enforcement practices and unfair treatment in an effort to protect its Korean competitors," the report says.

"This discrimination has included the initiation of ceaseless investigations and onsite inspections, punitive regulatory obligations, retaliatory enforcement decisions, excessive fines, and even criminal charges against American citizens."

Criticizing South Korea's investigation process as a "harassment" campaign, the report points out that following it, Coupang's market capitalization has fallen by more than 40 percent, negatively affecting U.S. investors in the company.

It also notes that last month, South Korean authorities fined Coupang over $410 million -- an amount that it describes as the "largest fine ever imposed on a single company that far exceeds fines imposed on South Korean companies for more serious data breaches."

"The Committee and Subcommittee will continue to conduct oversight of these foreign anti-competitive regimes to inform potential legislative reforms to protect American businesses and consumers," it says.