Fair Trade Commission Sanctions Naver Real Estate for Excluding Competitors
Fair Trade Commission: "Naver signed an exclusive contract with real estate information providers, prohibiting information sharing with competing businesses"
Naver: "We will review legal and institutional response measures"
[Asia Economy Reporter Joo Sang-don] The Fair Trade Commission (FTC) announced on the 6th that it has decided to issue a corrective order and impose a fine of 1.032 billion KRW on Naver for entering into contracts with real estate information providers (CPs) that prohibited them from providing real estate listing information supplied to Naver to third parties.
The online real estate information platform market began to grow in the late 1990s with the establishment of real estate information providers such as Real Estate 114, Real Estate Bank, and Doctor Apartment. Naver started offering a service displaying real estate listings in March 2003.
Song Sang-min, Director of the Market Surveillance Bureau at the FTC, stated, "Naver is the market-dominant operator as the industry leader by any standard, whether by number of listings or traffic," adding, "During the period of the conduct, Naver held over 40% of the total listings and more than 70% market share in terms of unique visitors and page views."
The FTC judged that Naver blocked Kakao's entry into the real estate market. Kakao attempted twice to partner with real estate information providers to expand its real estate information service, but all attempts failed due to Naver's interference. According to the FTC, in February 2015, Kakao confirmed that 7 out of 8 real estate information providers affiliated with Naver were willing to partner with Kakao and proceeded with partnership efforts. Upon recognizing this, Naver notified the providers that it would insert a clause prohibiting the provision of verified listing information to third parties in contract renewals, and all providers partnering with Kakao informed Kakao that partnerships were not possible in order to maintain contracts with Naver.
In fact, in May 2015, Naver inserted a clause in contracts with real estate information providers prohibiting the provision of verified listing information to Kakao. Furthermore, in May 2016, to ensure effectiveness, an explicit penalty clause was added allowing immediate contract termination if providers violated the prohibition on providing verified listings to third parties.
In early 2017, Kakao attempted to renew a business partnership with Real Estate 114, which had a lower proportion of listing partnerships with Naver compared to other providers, but this also failed. This was because Naver notified providers that it would prohibit third-party provision for three months not only of verified listings but also of all listings verified by the Real Estate Listing Verification Center.
The FTC viewed that due to this series of events, Kakao's attempts to collect listing information through partnerships with real estate information providers were thwarted, effectively pushing Kakao out of the market. Kakao's listing volume and sales sharply declined, and since April 2018, Kakao has been operating its real estate service through a consignment agreement with Zigbang.
Director Song pointed out, "Naver's market dominance has been further strengthened due to the weakening of competing businesses," and added, "Ultimately, this has resulted in a reduction of consumer choice."
Accordingly, the FTC decided to impose a corrective order (cease and desist order) and a fine of 1.032 billion KRW on Naver.
Regarding the FTC's decision, Naver stated, "Kakao attempted to use Naver's 'verified listing information' without any cost or effort, so Naver included the 'prohibition on third-party provision clause' to prevent 'free riding' and protect its 'intellectual property rights.' We will review legal and institutional response measures to protect our legitimate rights and promote the healthy growth of the real estate information service market."
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