'Voluntary Correction Plan' Rejected for Kakao Mobility

Fair Trade Commission Rejects Consent Decision Proposal

The Fair Trade Commission rejected Kakao Mobility's voluntary corrective action plan (consent decree) after it was accused of abuse of power by blocking calls to franchise taxis subscribed to competing taxi call services. With this rejection, Kakao Mobility is expected to find it difficult to avoid administrative sanctions such as fines.

On the 20th, the Fair Trade Commission held a plenary meeting and announced on the 28th that it had rejected the consent decree submitted by Kakao Mobility. The Commission explained, "After deliberation, it was determined that the applicant (Kakao Mobility) did not meet the requirements to initiate the consent decree procedure, and thus decided not to commence the consent decree process." Considering the severity and clarity of the legal violations, as well as the need for prompt action?conditions required for adopting a consent decree?the Commission judged that initiating the consent decree was not appropriate.

A Fair Trade Commission official stated, "We judged that initiating the consent decree procedure was not appropriate given the urgency of the matter and the necessity for swift measures or direct compensation to consumers." Accordingly, the Commission will determine the legality and level of sanctions against Kakao Mobility's abuse of market dominance through future deliberations.

The Fair Trade Commission judged that Kakao Mobility, which dominates the taxi call app market, violated the Fair Trade Act by excluding competing franchise taxis such as Wuti and Tada from the service by not assigning calls to them, and sent a review report including sanction recommendations.

Kakao Mobility is accused of abusing its market dominance by demanding trade secrets such as operation information from competing franchise headquarters and blocking the KakaoT app call service for affiliated taxis if they refuse. The review report reportedly includes recommendations for imposing fines and prosecuting Kakao Mobility.

To avoid legal disputes and administrative sanctions, Kakao Mobility applied for the initiation of the consent decree procedure with the Fair Trade Commission on October 19. Subsequently, it proposed corrective measures including fully opening the KakaoT app to other taxi call apps and completely restructuring the taxi business by changing its operation methods and systems. It also planned to raise 10 billion KRW to support research related to mobility and taxi industry development and to aid the growth of taxi organizations.

Industry insiders and observers analyze that with the Fair Trade Commission's recent decision, Kakao Mobility can no longer rule out the possibility of facing corrective orders along with heavy fines. The consent decree is a system where a business operator proposes corrective measures such as restoration or compensation, and if the Fair Trade Commission recognizes their validity, the case is swiftly closed without confirming illegality. It was introduced in 2011 to exempt companies from administrative sanctions if they admit wrongdoing and voluntarily correct it.