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eBay Korea, the US-based company that operates Gmarket, Auction, and other shopping malls, is being accused of coercive tactics in demanding that its advertising agencies not sign contracts with other companies. Small advertising agencies are struggling, reporting declines of over 31% in sales. While eBay has said the measure is due to “confidentiality” needs, most industry observers see it as an attempt to keep competitors like 11street in check by coercing the agencies. This is a likely case of an unfair practice requiring Fair Trade Commission (FTC) investigation.

eBay is the 500-pound gorilla of the online shopping market, dominating the online marketplace with a share of over 60%, including Gmarket (38%) and Auction (26%). Government support was instrumental in this dominance. eBay acquired Auction in 2001 and Gmarket in 2009; in 2011, the FTC granted unconditional approval for the two companies’ merger. Industry observers objected to the FTC approval, which they viewed as preferential treatment toward a foreign company. Some voiced concerns that eBay might exploit its dominant market position to engage in unfair practices.

eBay’s behavior since the merger has been disappointing to say the least. In addition to its high-handedness with ad agencies, it has also been reluctant to address customer disputes. Korea Consumer Agency figures ranked eBay first last year for refusals to arbitrate disputes, with 17. The company has placed in the top ten for four straight years for consistently refusing to arbitrate.

eBay Korea has also drawn heat for giving dividends that exceed its profits. Last year, it gave out 126.1 billion won (US$115.9 million) in dividends, after making a net profit of 93.0 billion won (US$85.5 million). With eBay’s US headquarters owning 100% of eBay Korea, the dividends mean its earnings in South Korea are ending up in the US. While its dividends are high, its charitable donations are a pittance. Despite setting new performance records each year, eBay Korea’s donations for 2016 totaled 72.5 million won (US$66,600), or 0.0083% of sales. Even that was an increase from 9.5 million won (US$8,700) in 2015.

Despite its neglect of customer disputes, browbeating of small businesses, outflows of South Korean money, and feeble charitable donations, eBay continues to thrive. Its sales rose by 30.4% from 662.2 billion won (US$608.8 million) in 2013 to 863.3 billion won (US$793.6 million) last year. Thanks to its huge market share, customers continue to take advantage of its services. It’s enough to make one worry that eBay views the South Korean market as “chumps.”

By Kim So-youn, staff reporter

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