Prosecutors Indict Yanolja and GoodChoice Without Detention for "Discount Coupon Abuse"... Founder Also to Stand Trial

Arbitrary Voiding of Unused Discount Coupons by Affiliated Businesses Alleged
35.9 Billion Won for GoodChoice, 1.21 Billion Won for Yanolja
Prosecutors: "Abuse of Power Exploiting High Dependency on Platforms"

Online platforms Yanolja and Yanolja have been indicted on charges of inflicting hundreds of billions of won in damages by engaging in 'advertising abuse' targeting small and medium-sized business owners operating accommodation facilities listed on their platforms.

Na Hee-seok, Chief Prosecutor of the Fair Trade Investigation Division at Seoul Central District Prosecutors' Office, is announcing the investigation results of the price-fixing case of starch syrup and by-products on the 23rd at the briefing room of Seoul High Prosecutors' Office in Seocho-gu. Photo by Yonhap News

The Fair Trade Investigation Division at the Seoul Central District Prosecutors' Office (chief prosecutor Na Hee-seok) announced on May 20 that it had indicted Yanolja, Yanolja, and Mr. A, the former CEO of Yanolja, without detention, on charges of violating the Monopoly Regulation and Fair Trade Act.

According to the prosecution, from 2018 to 2024, Yanolja is accused of abusing its bargaining position over affiliated motels and other partner businesses by arbitrarily invalidating approximately 35.9 billion won worth of unused discount coupons. Yanolja is also accused of invalidating approximately 1.21 billion won worth of remaining coupons from February 2017 to May last year in the same manner.

Yanolja and Yanolja are online accommodation application operators with a significant share of small and medium-sized lodging businesses in South Korea as their affiliates. The prosecution pointed out that the listing rate of motels and similar lodgings is about 86% for Yanolja and about 95% for Yanolja, and that more than 60% of their sales are generated through accommodation apps, making it virtually impossible for these businesses to operate normally without using the two platforms.

The investigation found that these companies profited by selling advertising products exposed on their apps combined with discount coupons to lodging businesses, and then invalidated unused coupons after their expiration date. In particular, it was confirmed that Yanolja set the validity period of some coupons to just one day.

The prosecution determined that Mr. A was the final decision-maker responsible for designing and approving this coupon policy at Yanolja. It was also found that Mr. A subsequently sold Yanolja to a UK-based private equity fund for approximately 300 billion won.

This case began in July 2020 when the Korea Hotel Business Association reported Yanolja and Yanolja to the Fair Trade Commission. In June last year, the Fair Trade Commission imposed fines of 1 billion won on Yanolja and 540 million won on Yanolja but did not file criminal charges. Later, the Ministry of SMEs and Startups exercised its right to request prosecution, considering the seriousness and social impact of the issue, and the prosecution launched a compulsory investigation, including searches and seizures at both companies in March this year.

During the investigation, the prosecution not only established charges against both companies, but also confirmed that Mr. A received a report on the discount coupon structure and gave final approval in February 2018, and therefore exercised the right to request prosecution for Mr. A as well.

The prosecution stated, "We will do our utmost to maintain the indictment so that 'abuse of power' crimes, which harm economically vulnerable people and undermine fair competition, are eradicated and sentences commensurate with the defendants' crimes are handed down."

This content was produced with the assistance of AI translation services.