Seoul, Aug 27 (IANS) The fair trade watchdog's probe into the South Korean arm of US-listed Coupang appears to have hit a setback after the e-commerce giant refused investigators' recent attempts to conduct on-site inspections, citing procedural issues, industry sources said on Thursday.

According to sources, the Fair Trade Commission (FTC) had planned to conduct on-site inspections of Coupang's South Korean unit from last week through this week over allegations that the company violated the Act on Fair Transactions in Large Retail Business.

The allegations center on suspicions that Coupang shifted the costs of discounts onto its suppliers, reports Yonhap news agency.

Sources said Coupang declined to cooperate with the investigation, claiming that the company had not been notified of the inspections as stipulated under the Framework Act on Administrative Investigations.

"The requirement to provide seven days' advance notice of an on-site inspection is a legal procedure designed to protect the rights and interests of those subject to an investigation," Coupang said in a statement earlier this week.

"Coupang plans to seek a court ruling over the FTC's failure to comply with such procedures," it added.

Sources said the FTC attempted to conduct the inspections four times, while Coupang filed a lawsuit seeking to overturn the watchdog's decision to conduct the on-site inspections. The FTC withdrew from the site on Monday after learning of the lawsuit.

While the framework act stipulates that the seven-day advance notice requirement does not apply to investigations into violations of eight laws under the FTC's jurisdiction, Coupang argued that the Act on Fair Transactions in Large Retail Business does not fall under the exemption.

The dispute stems partly from the timing of the legislation, as the framework act was enacted in 2007, while the Act on Fair Transactions in Large Retail Business was enacted in 2011.

Industry watchers said the FTC maintains that the case falls under an exception provided for in the framework act.

The court plans to hold a hearing next Wednesday to hear arguments from both sides before deciding whether to formally suspend the inspection.

--IANS

na/