Fair Trade Commission fines Bar Association 2 billion KRW for blocking 'Lotok'... "First sanction on platform restriction"

[Asia Economy Reporter Eunju Lee] The Korea Fair Trade Commission (KFTC) has imposed corrective orders and a total fine of 2 billion KRW on the Korea Bar Association (KBA) and the Seoul Bar Association (Seoul Bar), which disciplined lawyers affiliated with the legal service platform, Lotok. The KFTC reaffirmed that the KBA, a professional occupational organization, qualifies as a business association and judged that the KBA restricted its members' business activities through free advertising.

On the 23rd, the KFTC determined that the KBA and Seoul Bar, as business associations, excessively restricted the free business activities of their affiliated lawyers, and issued corrective orders to stop and prohibit disciplinary actions demanding the prohibition of use and withdrawal from Lotok. Furthermore, the KFTC applied the Fair Trade Act violations to the KBA and Seoul Bar and imposed the maximum fine of 1 billion KRW each, totaling 2 billion KRW. However, no separate criminal charges will be filed. Shin Dong-yeol, head of the Cartel Investigation Bureau, explained, “Considering that the KBA and Seoul Bar have no prior legal violations, we decided not to file charges against the corporations.”

One of the main issues in this case was the nature of the KBA as an organization. The KBA claimed that it is a public interest organization and not a business association, thus not subject to the Fair Trade Act. However, the KFTC viewed the KBA as a ‘business association’ subject to the Fair Trade Act, similar to other professional occupational organizations with disciplinary authority over their members, such as the Medical Association or the Judicial Scrivener Association. Shin Dong-yeol stated, “There have been cases where professional occupational organizations with public interest characteristics, like the Medical Association or Judicial Scrivener Association, were sanctioned under the Fair Trade Act for prohibited acts by business associations. Having a public interest nature and performing certain functions does not exempt an organization from the Fair Trade Act.”

The KFTC judged that the KBA’s use of disciplinary authority to prevent its affiliated lawyers from freely conducting business activities constitutes a ‘prohibited act by a business association’ under the Fair Trade Act. Previously, the KBA pressured 1,440 lawyers affiliated with Lotok by demanding submission of withdrawal letters from Lotok four times between August and October 2021. Despite the Ministry of Justice, the authoritative interpreter of the Attorney-at-Law Act, ruling in 2021 that Lotok is an advertising platform and does not violate the Attorney-at-Law Act, the KBA arbitrarily prohibited its members from advertising on Lotok. Additionally, the KFTC viewed Lotok as an advertising platform and found that the KBA violated the Advertising Act’s restrictions on advertising by constituent businesses.

The KFTC stated, “This action is the first case to sanction a business association for restricting advertising by demanding constituent businesses to prohibit use of or withdraw from a specific platform.” It added, “It is significant that we detected and corrected acts that restricted lawyers’ free advertising activities through newly emerging platform services in the legal service market, thereby limiting consumer choice.” The KFTC also announced, “We will strengthen monitoring of existing business associations’ acts that obstruct new platform entry and business activities in the service innovation platform sector and will strictly sanction any violations of the law.”