[How to Regulate Big Tech]④ "We Need to Consider Revising the Korean-style Fair Trade Act and Enacting Special Laws"

"Europe's DMA is an Overly Strong Pre-Regulation
How to Significantly Reduce the Burden of Proof for Competition Authorities"
Europe's 'Strong Regulation' vs. U.S. 'Failed Congressional Approval'
Need to Consider Tailored Regulations Suitable for Korea

The awareness that current competition laws (Fair Trade Act) cannot resolve the monopoly and unfair practices of online platform companies is spreading among major countries. The core concern is that, if things continue as they are, a monopoly market centered on a few big tech platform companies could become entrenched. In South Korea, there is already a certain consensus on the need to reorganize platform regulations. However, the majority of experts agree that we should not follow the European-style regulatory system that seeks to rapidly intervene in the market by introducing strong 'ex-ante regulation.' They emphasize the need to consider the political context of Europe, which has failed to nurture its own domestic big tech.

Europe's DMA is a 'Strong Ex-Ante Regulation'... Eases Burden of Proof on Competition Authorities to Promote "Rapid Market Intervention"

[Image source=Yonhap News]

Europe was the first to put into practice the awareness of the monopoly and unfair regulation issues of platform companies. The core of the European approach is a shift to comprehensive 'ex-ante regulation.' While ex-post regulation requires authorities to bear the burden of proof of violations defined by law and seek court rulings, ex-ante regulation shifts much of the burden of proof onto companies. Because prohibited acts are specifically defined in the regulations, companies must prove that the regulatory application by authorities is incorrect to avoid sanctions.

The EU Digital Markets Act (DMA), which will take effect this May, pre-defines the companies subject to regulation (gatekeepers) and introduces their obligations and prohibitions. The aim is to eliminate delays caused by continuous disputes over market dominance and market definition between companies and authorities under competition law. As a per se legislation (where certain acts are automatically illegal), it can significantly speed up regulatory application.

This is intended to enable rapid market intervention through swift regulatory enforcement. Since 2010, EU competition authorities have attempted antitrust sanctions against companies like Google, but faced excessively long delays as companies contested these actions in court. Similarly, the U.S. introduced an 'antitrust package bill' with a comparable ex-ante regulatory approach in the House of Representatives in 2021, but it ultimately failed to pass. This was largely due to opposition from Republican lawmakers who argued that it would hinder the growth of domestic platform companies like Google and Apple.

Majority of South Korean Fair Trade Act Experts Oppose European-Style DMA... Warn of Suppressing Growth of Domestic Platforms

Most South Korean Fair Trade Act experts believe that strong ex-ante regulations like the European DMA or the U.S.-style antitrust package, which were enacted considering Europe's political particularities, should not be introduced. South Korea has domestic platforms such as Naver, Kakao, and Coupang, and there are concerns that enacting comprehensive preemptive regulations like the DMA, which uniformly designate these companies as regulatory targets, could lead to being overtaken by global companies.

Professor Jeong In-seok of Hankuk University of Foreign Studies said, "We need to consider the context in which Europe introduced the DMA to foster its domestic companies. It is not appropriate to introduce ex-ante regulations that hinder the growth of domestic companies like Naver and Kakao, which are not clearly dominant players in the market." He diagnoses that South Korea's digital market is not yet completely monopolized by any specific platform.

However, there is a considerable view that a new regulatory system is needed to adapt to changes in the platform economy in some form. Yang Yong-hyun, a senior researcher at the Korea Development Institute (KDI), said, "There are problems in the platform economy that the current Fair Trade Act does not cover, and it is time to find ways to address them." Accordingly, in January, the Korea Fair Trade Commission's Online Platform Policy Division launched an 'Online Platform Regulation Improvement Expert Task Force' composed of 17 experts in economics and law, and has held three meetings to discuss amendments to the current Fair Trade Act or the introduction of special laws.

KFTC Discussing Amendments to Fair Trade Act in 'Online Platform Regulation Improvement Expert TF'

The TF has been exchanging various opinions, including the need to elevate the types of competition-restricting behaviors in the platform economy defined in the KFTC's January 'Online Platform Monopoly Review Guidelines' (such as self-preferencing, multi-homing restrictions, tying sales, most-favored-nation clauses) and the criteria for determining market-dominant platform operators (cross-network effects, economies of scale, gatekeeper roles) into law. The goal is to raise these guidelines from a review-level to a legislative level to facilitate ex-post regulation of digital platforms. In other words, the intention is to make it easier for the KFTC to prove market dominance or competition restrictions when enforcing ex-post regulations on big tech companies. Discussions are ongoing on whether to amend the Fair Trade Act or introduce a special law like the 'On-Ple Law.'

Some voices argue that strengthening only ex-post regulation is insufficient for effective regulation. Kim Yoon-jung, a research fellow at the Korea Legislation Research Institute, said, "There needs to be a shift in the burden of proof. The KFTC currently has to prove market definition and competition restriction one by one to demonstrate abuse of market dominance by platform companies, which takes too long and deepens market monopolies." She added, "While not as strong as the DMA, it is necessary to consider adding special regulations for platform operators in the Fair Trade Act and shifting the burden of proof to the operators." She also noted, "Raising the legal status of the review guidelines to strengthen ex-post regulation alone is insufficient."

However, there is also an opposing view that the current Fair Trade Act is sufficient to sanction big tech companies. Professor Joo Jin-yeol said, "The current Fair Trade Act can adequately sanction Korean platform companies if they abuse market dominance or engage in unfair trade," adding, "It is the regulatory authorities' responsibility to prove market dominance and competition restriction." A platform industry insider said, "Unlike the U.S., South Korea has a competitive market," and gave the example of the e-commerce sector, where no single company has an overwhelming market share and fierce competition continues. They warned that strengthening regulations in a structure where dominance is hard to maintain could harm market competition."