Joseonguk "Amendment of the Electronic Commerce Act aims to change what was in the 'Guseokgi' era to a 'Modern' one"

Amendment of the Electronic Commerce Act is a task to expand the scope to applicable platforms
Consumers must be informed whether the purchase source is the platform or the store
Advertising status of search results and exposure ranking criteria must be disclosed

The enactment and amendment of the On-Platform Act and the Electronic Commerce Act aim to create a win-win structure between platforms and stores

Cho Sung-wook, Chairman of the Fair Trade Commission (file photo)

[Sejong=Asia Economy Reporter Joo Sang-don] Cho Sung-wook, Chairman of the Korea Fair Trade Commission, stated on the 5th, "The Electronic Commerce Act, created in 2002 and stuck in the Stone Age, needs to be modernized to fit the current era."

On the same day, Chairman Cho appeared on TBS's 'Kim Eo-jun's News Factory' and explained the purpose of the amendment to the Electronic Commerce Act.

Chairman Cho explained, "Until now, the Electronic Commerce Act applied only to communication service providers such as TV home shopping and mail order, with no consideration for mobile or platforms. Platforms handle order reception, payment, and delivery, so consumers buy products from stores on the platform but cannot clearly distinguish this."

Regarding the main amendments to the Electronic Commerce Act, he said, "We will ensure that consumers are clearly informed whether they are buying from the platform or the store. Also, we want to accurately inform whether search results are advertisements so that consumers can make rational choices."

The Fair Trade Commission is also promoting the enactment of the Online Platform Fairness Act (On-Platform Act) alongside the amendment of the Electronic Commerce Act. The Fair Trade Commission announced the draft of the On-Platform Act in September last year and submitted it to the National Assembly after the Cabinet meeting at the end of last month.

Chairman Cho explained, "There has been no law regulating the transaction relationship between online platforms and stores, that is, the dominant-subordinate relationship. The Fair Trade Commission aims to apply what it has done through the Large-scale Distribution Act to the online sector as well."

He gave the delivery application market as an example. Chairman Cho said, "Delivery apps widely used by consumers are platforms, and the places selling various foods through them are stores. We want to regulate whether the platform-store relationship is conducted according to proper rules. Without the On-Platform Act, platforms could abuse their dominant position in transactions."

The On-Platform Act applies to businesses that provide services mediating transactions between stores and consumers through online platforms, with sales of 10 billion KRW or more and sales amounting to 100 billion KRW or more, as specified by enforcement ordinances. The Fair Trade Commission expects about 30 platforms, including Naver and Google, and 1.8 million stores to be covered. The On-Platform Act mandates that platform operators and stores must prepare and provide contracts to prevent disputes. Contracts must include essential details such as service content, compensation, service commencement, restrictions, suspension, changes, product exposure, and damage-sharing criteria. Also, if contract terms are to be changed, stores must be notified in advance; service restrictions or suspensions require 7 days' prior notice, and contract termination requires 30 days' prior notice.

Chairman Cho said, "What the Fair Trade Commission pursues through the enactment and amendment of the On-Platform Act and the Electronic Commerce Act is not only to establish a fair digital economy through regulation. For the industry to grow properly in the long term, the win-win relationship between platforms and stores is important, so we aim to create this win-win structure."