Apple Delays Voluntary Correction... 'Apple Gapjil Prevention Act' to Be Introduced

Assemblyman Kim Young-sik Introduces Amendment to Fair Trade Act
Apple Shows Insufficient Voluntary Correction Efforts Over 5 Months Since February Consent Decision Approval
Intended to Address Legal Loopholes in Consent Decision System

[Image source=Yonhap News]

[Asia Economy Reporter Cha Min-young] Apple Korea, which caused controversy over ‘gapjil’ against domestic mobile carriers, has been found not to properly implement the voluntary corrective measures submitted in 2019. A so-called ‘Apple Gapjil Prevention Act,’ aimed at preventing a second Apple, has been proposed in the National Assembly.

On the morning of the 16th, Kim Young-sik, a member of the People Power Party, officially proposed the “Partial Amendment to the Monopoly Regulation and Fair Trade Act” with this content. Eleven other lawmakers joined as co-sponsors.

This amendment mandates that applicants for the consent decree system submit documents proving the cessation of the relevant act and voluntary consumer damage relief efforts for the six months immediately preceding the application date. The consent decree system, introduced in Korea in 2011, is a system that allows businesses to voluntarily correct potentially illegal acts under the approval of the competition authority.

According to Kim Young-sik’s office, Apple Korea submitted a consent decree proposal to the Korea Fair Trade Commission (KFTC) in 2019, including improvements to competition-restricting acts and damage relief. However, despite receiving approval for the consent decree in February this year and being required to implement the voluntary corrective measures for three years, Apple Korea is still presenting headquarters-centered contract terms to mobile carriers as of five months later. Negotiations with the carriers have also made no progress.

Industry insiders point out that to enhance the effectiveness of this amendment, the details of the conditions need to be specified. The actual amendment does not specify the contents and detailed criteria of the supporting documents. While the intention is to leave it to the discretion of the KFTC for flexible application of the law, the industry expresses concerns since the KFTC faced criticism for a ‘light punishment’ when approving Apple Korea’s consent decree in February this year. A telecommunications industry official said, “Earlier this year, Apple stated in its self-corrective plan that it would ‘engage in consultations,’ so there was some ambiguity,” adding, “Specific criteria will be important to prevent the law from becoming useless in the realm of private contracts.”

There is also an intention to supplement legal loopholes in the current consent decree system. The National Assembly Legislative Office pointed out in a past report that “If the Korea Fair Trade Commission, the sole competition authority with exclusive enforcement power, carries out poor enforcement, the last line of defense protecting public interest and fair trade in the market order system collapses, so checks and balances to prevent this are necessary.” However, some in academia warn that this could have side effects that discourage companies from using the consent decree system.

A representative from Kim Young-sik’s office said, “There is an administrative blind spot where Apple does not implement the corrective measures it proposed itself,” and added, “The KFTC is aware of the problem but is considering methods, so this means efforts to enhance the effectiveness of the consent decree system.”

This amendment to the Fair Trade Act was jointly proposed by 12 lawmakers, including Kim Young-sik, Kim Hee-guk, Lee Jong-sung, Han Mu-kyung, Kim Byung-wook, Kim Jung-jae, Park Sung-joong, Seo Il-jun, Koo Ja-geun, Kim Sung-won, Tae Young-ho, and Kim Seung-soo.