Fair Trade Commission Initiates Measures to Prevent Platform Abuse by Naver and Baemin

Industry Opinions Gathered for Legislation in Early Next Year
Regulating Unfair Practices of Large Online Shopping Malls
'Double Regulation' Criticism Raised
Fair Trade Commission: "Resolving Polarization Between Platform Companies and Sellers"

Jongwook Cho, Chairman of the Fair Trade Commission. (Photo by Yonhap News)

[Asia Economy Reporter Moon Chaeseok] The Fair Trade Commission (FTC) has decided to regulate unfair practices by online platform companies such as Naver and Baedal Minjok through legislation. However, there are concerns about "double regulation" overlapping with existing laws.

Earlier, on the 25th, the FTC announced plans to enact the "Act on the Fairness of Online Platform Intermediated Transactions" (tentative name). The goal is to legislate in the first half of next year by gathering industry opinions and preparing detailed provisions.

An FTC official explained, "The risk of unfair practices is increasing, such as platform companies passing promotional costs onto tenant businesses, and platforms avoiding responsibility for defective product deliveries, leading to increased consumer harm."

The FTC states that it is difficult to eradicate unfair practices with only Article 23 of the Fair Trade Act, which prohibits abuse of transactional status. It is unclear whether platform operators hold transactional status.

For example, since a restaurant that transacted through Application A can switch to another platform like Baemin without issue, it is difficult to determine that the platform operator has transactional status over tenant businesses.

The need for prior regulation is supported by the fact that once dependent on a platform, businesses inevitably show high transaction dependence, and that advanced countries such as the European Union (EU) and Japan are enacting similar laws.

The FTC will separately establish review guidelines to prevent unfair practices by large online shopping malls such as Coupang and Market Kurly. These guidelines aim to stop practices where losses from price discounts are passed onto suppliers under the pretext of advertising fees, server costs, and other charges.

There are also criticisms of "double regulation" since Coupang, SSG.com, Market Kurly, and others targeted by the FTC’s legislation are already subject to the "Large-Scale Distribution Business Act."

Article 11, Paragraph 1 of the Large-Scale Distribution Business Act stipulates, "Promotional costs must not be imposed on suppliers without consent," which is similar to the FTC’s proposed regulations.

Additionally, unfair terms of use between Baemin and dining businesses will be improved in the second half of the year. The Electronic Commerce Act will be amended in December to strengthen the legal responsibilities of platform operators.

An FTC official stated, "This will help resolve polarization between giant platform companies and tenant businesses, establish a foundation for inclusive growth, and serve as an opportunity to establish a fair economy in the emerging and growing digital economy sector."