[2023 Economic Policy] Focused Monitoring on Abuse of Monopoly Position by 'Nekarakubae'

[Asia Economy Reporter Eunju Lee] Next year's economic policy direction includes new criteria for judging the illegality of online platform operators. This is based on the judgment that the current criteria for reviewing abuse of market dominance, which are grounded in traditional industries such as manufacturing, are difficult to apply to the characteristics of the online platform market. As the criteria for determining market dominance are significantly expanded, major online platform companies such as ‘Nekarakuba (Naver, Kakao, Line, Coupang, Baedal Minjok)’ are expected to become the focus of intensive monitoring.

The government announced the ‘2023 Economic Policy Direction’ containing these details on the 21st. It includes the establishment and revision of platform monopoly review guidelines that the Fair Trade Commission is promoting to prevent abuse of monopoly power by platforms. The Fair Trade Commission plans to include platform companies’ data collection and retention capabilities, number of users, and usage frequency as new criteria for determining market dominance. This is intended to consider market environments where platform companies adopt free policies in the early stages of market entry or choose strategic deficit policies. Accordingly, the judgment of abuse of market dominance by big tech companies like Nekarakuba is expected to be strengthened compared to before.

Regulations on mergers and acquisitions of platform companies will also be strengthened to curb the sprawling market expansion of big tech companies. The Fair Trade Commission plans to revise the corporate merger review standards by the first half of next year, changing the review of mixed-type mergers of platform companies (mergers between companies that are not in direct competition or transactional relationships), which were mostly handled through simplified review (a system that quickly approves within 15 days after confirming the filing), to general review to strengthen scrutiny. The review will comprehensively consider the restriction of competition and the effect of increasing consumer welfare. Furthermore, the scope of self-regulation will be expanded by analyzing the outcomes of voluntary regulations derived mainly by private platform self-regulatory organizations. Currently, voluntary regulations related to commissions and advertising fees promoted by delivery app platforms and open market companies will be expanded to various platform sectors such as accommodation apps and app markets.

The plan also includes deregulation measures to promote the growth of small and medium-sized enterprises and startups. The current sales threshold (4 billion KRW) for presuming market dominance will be raised considering economic growth scale and other factors. The current Fair Trade Act stipulates that companies with ‘annual sales under 4 billion KRW’ are not presumed to be market dominant even if their market share is high. Additionally, an enforcement decree for the Subcontracting Act will be prepared to implement the delivery price linkage system (a system that reflects raw material price increases in delivery prices in transactions between primary contractors and subcontractors), and special loans and guarantees worth 1 trillion KRW will be provided to large and medium-sized companies that have introduced the delivery price linkage system. Moreover, through the revision of review guidelines in May next year, the criteria for judging private benefit appropriation by the controlling family, such as ‘work allocation favoritism,’ will be specified.