Fair Trade Commission Draws Sword in 'Kakao Incident'... Full-Scale Response to Platform Monopoly

Fair Trade Commission Reports 'Platform Monopoly Measures' to Presidential Office
Plans to Establish 'Platform Monopoly Review Guidelines' Within the Year

On the 20th, as Kakao CEO Namgung Hoon resigned due to a failure caused by a data center fire and the company entered an emergency management system, employees were arriving at Kakao Ajit in Seongnam, Gyeonggi Province. Photo by Kang Jin-hyung, Seongnam aymsdream@

[Asia Economy Sejong=Reporter Lee Jun-hyung] The Korea Fair Trade Commission (KFTC) is set to intensify its response to the monopoly of online platforms following the 'Kakao outage' incident.

On the 21st, the KFTC announced that it has prepared a 'Fair Competition Foundation Measures for the Online Platform Market' and reported it to the Presidential Office. This measure was prepared in response to the Kakao incident that occurred on the 15th of this month.

The KFTC views the Kakao incident as a result of a monopolistic platform without competitive pressure in the market failing to fulfill innovation efforts and social responsibility. Accordingly, through this measure, the KFTC plans to promote customized institutional improvements to resolve the platform monopoly issue. It also intends to take strict action against illegal acts by platform companies abusing their monopoly power.

First, the KFTC will establish and supplement enforcement standards reflecting the characteristics of online platforms. To effectively regulate the abuse of monopoly power in the platform sector, the KFTC plans to enact the 'Online Platform Monopoly Review Guidelines' within this year. The guidelines are expected to include specific cases such as market definition and market dominance evaluation criteria considering platform characteristics, as well as typical violation types.

Chairman Han Ki-jung of the Fair Trade Commission attending the Cabinet meeting
(Sejong=Yonhap News) Reporter Kim Joo-hyung = Chairman Han Ki-jung of the Fair Trade Commission is attending the Cabinet meeting held at the Government Complex Sejong in Sejong City on the morning of the 18th. 2022.10.18
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Originally, the KFTC was operating a public-private joint task force (TF) to prepare the platform monopoly review guidelines. The KFTC has already completed expert services and administrative notice related to the enactment of the guidelines. A KFTC official explained, "We are currently in the stage of preparing balanced alternatives on key issues through academic discussions," adding, "Once the guidelines are prepared, it will be possible to effectively prevent competition-restricting acts among platform operators and enhance the effectiveness of law enforcement."

The KFTC will also restrict the sprawling business expansion of giant platforms such as Kakao and Naver. To effectively block mergers and acquisitions (M&A) by platform companies, the KFTC plans to revise the 'Merger Review Standards.' The KFTC intends to supplement the standards by considering the unique characteristics of platforms, such as strengthening dominance through interconnection of multiple services, as a factor in assessing competition restrictions.

Through the revision of the review standards, mixed-type mergers of platform companies, which were usually handled through 'simplified review,' will in principle be converted to 'general review.' While simplified review only verifies facts in cases presumed to have no competition restrictions, general review focuses on competition restrictions through market definition and market concentration. The KFTC plans to prepare specific improvement measures through research projects by the end of this year and begin revising the review standards early next year.

The KFTC also intends to strictly punish platform companies' competition-restricting acts and covert acts to maintain or strengthen dominance. In particular, it will strengthen monitoring of acts abusing market dominance to favor their own services over competitors', acts obstructing competitors' business activities, and violations of large business group policies.