[The Editors' Verdict] A Consumer's Best Friend Is "Competition"

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"If the price is higher than Olive Young online mall's selling price, we will refund the difference as Curly points."

Curly, which pioneered the dawn delivery market in the domestic distribution industry, has prominently displayed this phrase since the 15th as it began 'lowest price' marketing for beauty products. CJ Olive Young expressed discomfort. Olive Young stated that it is unfair for a competitor to single them out and use a comparative marketing strategy when they are not currently in a price discount period.

Recently, IT-based e-commerce companies like Curly have been actively using comparative advertising strategies, causing public outrage in the distribution industry. Last month, Coupang compared the maximum sales commission of competitors (11st, SSG.com) while explaining suspicions that the open market’s maximum sales commission was high. 11st responded by reporting Coupang to the Fair Trade Commission for violations of the Act on Labeling and Advertising and the Electronic Commerce Act, stating that Coupang distorted the facts by comparing the maximum sales commission applied to a very limited number of products without objective evidence, making it seem as if 11st’s overall sales commission was excessively higher than Coupang’s. At that time, the maximum sales commissions revealed by Coupang were 10.9% for itself, 20% for 11st, and 15% for Shinsegae (Gmarket, Auction).

Comparative advertising is a common marketing method that appeals to superiority by comparing a competitor’s products or services with one’s own. In Korea, it has been allowed since the Act on Labeling and Advertising was enacted in 1999, and the Fair Trade Commission established the 'Guidelines for Review of Comparative Labeling and Advertising' in 2001 to promote comparative advertising. To persuade consumers through comparative advertising, providing more information to prove one’s superiority is essential, and it can also promote market competition. These guidelines classify comparisons made through metaphorical expressions or similar pronunciations that consumers can recognize, as well as directly specifying competitors’ trade names or products, as comparative advertising.

In Korea, where collectivism is strong, there have been many comparative advertisements that use metaphorical expressions rather than directly mentioning competitors’ trade names. Cases like Curly or Coupang explicitly naming competitors are rare but not unprecedented. In 2021, E-Mart implemented a lowest price guarantee system that refunded the difference if products purchased from its mall were more expensive than Coupang’s Rocket Delivery products or Lotte Mart Mall and Homeplus Mall’s store delivery products. E-Mart has been expanding its loyal customer base this year through a 'price destruction' declaration with a year-round lowest price strategy, which has ignited the lowest price competition among large mart industries.

Recently, the domestic distribution industry is greatly concerned as Chinese direct purchase (direct import) platforms such as AliExpress and Temu rapidly grow in the domestic market by emphasizing 'ultra-low prices.' There are calls to regulate these 'C-commerce' platforms to protect domestic companies. The situation where these C-commerce platforms dominate the domestic market with ultra-low price strategies and then exploit their monopolistic position to raise prices and engage in other abuses is worrisome even to reporters. However, the price competition triggered by C-commerce companies is a welcome development. Consumers lack information about product costs and other details, and this asymmetry can be resolved through such competition.

Similarly, comparative advertising targeting Olive Young, which has emerged as the absolute leader in beauty platforms, can provide useful information to consumers living in a high inflation era. Curly’s lowest price marketing is not something to be criticized as lacking business ethics.

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