'Tada Basic' Found Not Guilty After 4 Years of Legal Battles
"Politicians Changed the Law to Stifle Innovation"
Politicians Writing Apology Letters for Tada... "Blaming Yoon's Prosecution"
"Politicians siding with vested interests changed the law to stifle innovation."
Former Socar CEO Lee Jae-woong stated this on his Facebook on the 1st, after the Supreme Court upheld the acquittal of the lower court ruling that found no guilt in violating the Passenger Transport Service Act. This came right after the vehicle brokerage platform 'Tada Basic' received a Supreme Court acquittal following four years of legal battles. Although the legal dispute has ended, the 'legislative disaster' caused by the absence of conflict mediation roles by the National Assembly and government, and the political sector's lack of understanding of new businesses, remains ongoing.
'Icon of Innovation' Tada, Why Did It Go to Court?
Lee Jae-woong (right), CEO of Socar, and Park Jae-wook, CEO of VCNC, are entering the courtroom on the 10th at the Seoul Central District Court in Seocho-gu, Seoul, to attend the first trial sentencing hearing disputing the illegality of 'Tada.' Photo by Kang Jin-hyung aymsdream@
This trial began when the taxi industry filed complaints against VCNC and Socar, who started operating 'Tada Basic.' Tada Basic is a service launched in 2018 that allows users to rent an 11-seater van with a driver via a smartphone app. VCNC operated Tada by renting cars from Socar and then renting them out again to customers along with drivers. However, the taxi industry claimed this was 'illegal call taxi' operation. The prosecution also viewed Tada Basic as illegal under the Motor Vehicle Transport Act and indicted former Socar CEO Lee Jae-woong and former VCNC CEO Park Jae-wook without detention.
Tada strongly refuted this. They cited Article 18 of the Enforcement Decree of the Passenger Transport Service Act (deleted in April 2021), which included an exception clause allowing the provision of drivers when renting 11- to 15-seater vans, although drivers cannot be provided when renting regular vans.
Both the first and second trials accepted Tada's argument and acquitted the two individuals. The court's judgment was that since Tada only rents vehicles to specific members who make reservations in advance and does not respond spontaneously to requests from unspecified passengers on the street, it cannot be considered transporting an unspecified majority of passengers by vehicle. The Supreme Court also added, "There is no error in the lower court's ruling in terms of violating the rules of logic and experience or misinterpreting the old Passenger Transport Act provisions and the interpretation of declarations of intention."
Although the acquittal was confirmed, Tada cannot resume its past business model. This is because the political sector created the so-called 'Tada Ban Law' by amending the Passenger Transport Service Act, which fundamentally prohibits car rental businesses from providing drivers.
Ruling and Opposition Parties Create 'Tada Ban Law' to Completely Block Operations
The Tada Ban Law added a new condition that to receive a driver when renting a van, the rental must be for tourism purposes for six hours or more. It also stipulated that rented vehicles must be rented and returned at airports or ports. A new business category called 'Passenger Car Platform Transport Business' was established, requiring Tada to register as a platform transport operator rather than using the existing rental car method to continue operations.
In October 2019, when the prosecution indicted former CEO Lee without detention, the law was pushed forward under the leadership of Park Hong-geun of the Democratic Party. At that time, the political sector and government knew that if this law passed, Tada's operations would become illegal.
According to the minutes of the National Assembly Land, Infrastructure and Transport Committee's Traffic Bill Review Subcommittee meeting in November 2019, when People Power Party lawmaker Kim Sang-hoon (then a subcommittee member) asked, "Isn't the content of the amendment proposed by Park Hong-geun (regarding transport business with rental car licenses) a separate issue?" Kim Kyung-wook, then Vice Minister of Land, Infrastructure and Transport, replied, "If this amendment passes, Tada will not be able to operate in its current state."
Kim said, "There are many regulations on platform transport business almost close to statutory law, and the expert review report suggests many clauses need supplementation and revision," adding, "It would be better to separately invite stakeholders and experts to hear opinions and filter them." However, the Ministry of Land, Infrastructure and Transport opposed, saying "The more specific it becomes, the more conflicts arise."
In the second subcommittee meeting in December of the same year, the Fair Trade Commission opposed the bill, citing problems, but this was also ignored. The FTC stated, "Excluding a specific form of transport business in principle by law requires careful consideration from the perspective of promoting competition and consumer welfare." However, at the meeting, lawmaker Park Hong-geun, who prepared the bill, pushed strongly, and former lawmaker Lee Hyun-jae (now mayor of Hanam) agreed, allowing the amendment to pass the subcommittee.
Taxi Industry Cautious Ahead of General Election... Judiciary Committee Ignores Objections
"When two members oppose in the Judiciary Committee, the case usually goes back to the subcommittee or is shelved. Why is this just being passed?" (Former Democratic Party lawmaker Lee Cheol-hee)
"The Minister of Land, Infrastructure and Transport is giving incorrect answers. Tada employs over 10,000 people." (Former Democratic Party lawmaker Chae Yi-bae)
The Tada Ban Law faced a halt once in the National Assembly Judiciary Committee, which reviews the legal wording of bills. Former lawmakers Lee Cheol-hee and Chae Yi-bae opposed the law's passage, addressing then Judiciary Committee Chairman Yeo Sang-gyu, but their objections were not accepted. Chairman Yeo said, "I will summarize this as a minority opinion," and approved the original bill. Democratic Party lawmaker Song Ki-heon urged to "conclude" as the opposition continued.
The rapid processing of the Tada Ban Law in the National Assembly is attributed to the 21st National Assembly general election. The bill passed the plenary session in March 2020, one month before the April 15 general election. Lawmaker Park Hong-geun, who led the bill and chaired the Democratic Party's Euljiro Committee ('Committee for Protecting the People'), even met directly with Kim Jae-joo, former head of the Jeonbuk branch of the Public Transport Union Taxi Division, who was on a high-altitude protest in Jeonju at the time.
Political Sector Writes Reflection... Park Hong-geun Blames Yoon Seok-yeol's Prosecution
Within the political sector, voices of self-reflection emerged following the Supreme Court's final ruling in favor of Tada. Democratic Party floor leader Park Kwang-on said at the party's highest council meeting on the 5th, "Tada's victory is painfully accepted as the National Assembly's defeat," calling it "an example of politics failing to keep up with the times." He added, "Since the Asian financial crisis, all sectors of our society including business, finance, industry, culture, and film have changed," but "politics is still evaluated as being trapped in the past. The Democratic Party will lead technological innovation, present a vision for innovative growth, and promote legislation."
Former Zigbang Vice President Yeo Seon-woong, who worked at the Moon Jae-in administration's Blue House, proposed an online petition campaign to abolish the Tada Ban Law through Facebook, urging the startup industry to "make history of victory." Choi Byung-chun, head of the New Growth Economy Research Institute and former deputy director of the Democratic Research Institute, a Democratic Party think tank, called on the party on Facebook on the 2nd to "publicly apologize at the party level for Tada's acquittal" and urged "the abolition of the Tada Ban Law as a matter of responsibility and resolution."
In response, lawmaker Park Hong-geun wrote in the Democratic Party's group chat on the 5th, "This issue should have been approached as a 'policy judgment matter' with legislative alternatives, but the prosecution under Prosecutor General Yoon Seok-yeol's office hastily decided to indict without consulting the government and ruling party, escalating it into a 'criminal punishment issue' and leading to judicial judgment." He pointed to the prosecution's reckless indictment as the cause of the legal battle after the taxi industry filed complaints against Tada.
Ahead of Next Year’s General Election, 'Second Tada Ban Law' Awaiting
There are concerns in the political sector that a 'second Tada Ban Law' could be repeated ahead of next year's general election. Conflicts between existing businesses and new businesses continue, but the political sector has failed to devise proper solutions. For example, Law&Company, which operates the legal service platform 'Lotoc,' has been in conflict with lawyer associations for years. The Constitutional Court and Fair Trade Commission ruled in favor of Law&Company in May last year (banning lawyers from joining Lotoc deemed unconstitutional) and February this year (20 billion won fine on the Korean Bar Association, etc.), but most lawyers have withdrawn, and the company is struggling financially. The National Assembly has engaged in talks with lawyer associations to ease Lotoc regulations but has yet to reach a conclusion.
There are also conflicts between the Korean Pharmaceutical Association and platform businesses over the pilot project for non-face-to-face medical treatment, and ongoing disputes between real estate brokerage service Zigbang and the Korea Association of Realtors. A political sector official said, "During elections, lawmakers often collude with each other through bills or budgets that benefit each other," adding, "Regarding new business sectors, the government and political sector often block them, so there are concerns ahead of this election."
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