Fair Trade Commission Officially Moves to Regulate 'Nakao'... Formalizes Promotion of Platform Competition Act

Report on the 'Platform Competition Promotion Act (tentative name)' at the Cabinet Meeting on the 19th

The Fair Trade Commission is pushing for the enactment of the ‘Platform Competition Promotion Act (tentative name)’ to regulate platforms like Naver and Kakao. This comes from the judgment that the speed of law enforcement is not keeping up with the ever-changing market order of the platform economy, causing delays in resolving issues. The draft legislation focuses on pre-designating a few core platforms as ‘dominant platform operators,’ significantly reducing the time required for processes such as market definition. However, it is explained that specific criteria for designating dominant operators are still under discussion.

Fair Trade Commission Chairman Han Ki-jung is responding to a lawmaker's question at the National Assembly's Political Affairs Committee audit held on the 16th. Photo by Hyunmin Kim kimhyun81@

On the 19th, Han Ki-jung, Chairman of the Fair Trade Commission, reported the plan to promote the enactment of the ‘Platform Competition Promotion Act’ at the Cabinet meeting. The draft includes designating a few core platforms with significant market influence as ‘dominant platform operators’ and prohibiting frequently occurring unfair practices in the market, such as self-preferencing and restrictions on multi-homing (acts that prohibit users of a platform from using competing platforms).

Although anti-competitive behaviors of market-dominant operators can be regulated under the existing Fair Trade Act, applying the abuse of market dominance to a specific company requires proving whether the market definition was accurate and whether the behavior restricts competition. The problem is that, due to the unique nature of the platform economy, it is not easy to determine the extent of market definition, which takes considerable time. The issue of how far to define the relevant market when the same product is sold simultaneously online and offline has become a heated topic of debate.

Cho Hong-seon, Vice Chairman of the Fair Trade Commission, explained, “It takes a very long time to determine whether a platform company is a ‘market-dominant operator,’ so even if there are unfair practices, it is difficult to regulate them promptly. The problem is that in the new platform economy, the longer the regulation is delayed, the more the impact of anti-competitive behavior becomes entrenched, making it impossible to take corrective action later.” He added, “If we designate a few core platforms and specify typical types of illegal acts that can be handled, we believe the regulatory time, which used to take two to five years or more, can be reduced by more than half.”

However, the designation criteria and the unfair practices to be regulated have not yet been concretized. The Fair Trade Commission stated that the designation criteria will be prepared “in a way that does not hinder innovation in the platform industry while regulating the abuse of monopoly power.” Additionally, during the designation process, platform operators will be guaranteed various opportunities to present opinions before designation, raise objections after designation, and file administrative lawsuits. Vice Chairman Cho said, “We are in the process of preparing some measures through consultations with related ministries and ruling parties. Therefore, it is difficult to say that anything specific has been decided at this stage.”