Data submitted by the FTC to the office of Rep. Seo Il-jun of the People Power Party, a member of the National Assembly's National Policy Committee, showed that six FTC bureaus and six regional offices, including those in Seoul, Gyeongin and other provinces, carried out 701 on-site inspections over the four years from 2023 through July this year. All 701 planned inspections were actually conducted, a 100% execution rate.
Not one was preceded by advance notice. That indicates the absence of prior notification is not an exceptional response reserved for particular companies or cases. The same applied to the recent inspection of Coupang under the Large Retail Business Act. In the data submitted to Seo's office, the FTC said, "Since the Large Retail Business Act was enacted in 2012, there has been no case of advance notice in an on-site inspection into suspected violations of the law."
The FTC attributes the practice to the nature of field inspections. Giving notice in advance, it says, could allow companies to delete or conceal relevant records and let executives, employees or trading partners coordinate their accounts. Entering premises without warning to secure documents, the agency argues, makes inspections more effective.
Coupang has directly challenged that long-standing practice. When the FTC launched an on-site inspection in August to examine allegations that the company passed discount costs on to suppliers, Coupang declined to cooperate, saying it had not received written notice seven days before the inspection. It then filed a suit to cancel the inspection decision, along with a request for an injunction.
Coupang based its argument on the Framework Act on Administrative Investigations, which in principle requires that the subject of an administrative investigation be notified in writing of its purpose and duration at least seven days in advance. Because the Large Retail Business Act is not among the laws exempted from the framework act, Coupang argues, that principle should apply.
The FTC counters that it has no obligation to give advance notice, citing among other grounds the fact that the Large Retail Business Act applies the investigative provisions of the Fair Trade Act. Mandatory prior notification, it says, would undermine the effectiveness of field inspections. In court, the agency argued that granting the injunction "could set a precedent for businesses halting investigations altogether through injunctions, and could leave whether and when inspections take place dependent on how companies respond."
The court declined to halt the investigation. on Sept. 23, the Seoul High Court's Administrative Division 6-2 found that "the impact on public welfare from suspending the effect of the inspection decision outweighs the disadvantage the applicant would suffer from it." The FTC's inspection decision therefore regained effect, allowing the agency to resume its work.
Coupang filed a reappeal on Sept. 28. The reappeal does not, however, suspend the effect of the FTC's inspection decision. The legality of the inspection itself is expected to be settled in the main case.
