Venture Business Association to Release Statement on 24th
Emphasizes 'Overlapping Regulations' Due to Existing Laws
The venture industry has demanded the immediate halt of the Fair Trade Commission’s move to enact the ‘Platform Competition Promotion Act (tentative name).’
On the 24th, the Korea Venture Business Association stated in a press release, “If the Platform Act is enacted, it will effectively impose heavier regulations on domestic platforms, resulting only in hindering the growth and innovation of domestic platforms.”
The association first raised concerns that service restrictions and price increases caused by the Platform Act could harm consumer benefits. The association explained, “If the Platform Act is enacted, normal business activities aimed at providing the best service to consumers in the platform industry will be curtailed, eventually leading to service restrictions or price increases, and the damage will fall on consumers. For example, to avoid issues of self-preference, major platforms may terminate webtoon services that were previously offered for free, and membership programs that provide special delivery services only for self-purchased products may also face operational restrictions.”
The association also pointed out, “Platform companies and small and medium-sized merchants (tenant companies) are in a mutually beneficial relationship, not a dominant-subordinate relationship. While many small and medium-sized merchants are struggling to expand sales channels offline, they are accelerating growth relying on online platforms. If regulation is introduced and the platform industry shrinks, the damage will directly affect small and medium-sized merchants.”
Furthermore, the association added, “Small and medium-sized merchants are securing new sales channels and opportunities for sales growth through online platforms amid difficulties such as stagnant offline sales and increasing closure rates. Additional sales channels, such as overseas expansion, are also being executed through systems and competitiveness established by online platforms.”
The association also criticized the Platform Act as ‘overlapping regulation’ since various existing laws already regulate the sector. It emphasized, “Unlike other countries, Korea regulates unfair practices and abuse of market-dominant positions in the platform sector through the Fair Trade Act and various laws (Electronic Commerce Act, Large-scale Distribution Business Act, Standardized Contracts Act, Telecommunications Business Act). Since there is no regulatory gap in the platform sector in Korea, the Platform Act constitutes overlapping and unnecessary excessive regulation.”
Along with this, the association stated, “The major prohibited acts expected under the Platform Act, such as self-preference, prohibition of multi-homing, and tying sales, are essentially similar regulations to discriminatory treatment, tied transactions, obstruction of business activities, and forced transactions under the Fair Trade Act. Moreover, specific types of conduct are already guided and regulated through the ‘Guidelines for Review of Abuse of Market-Dominant Position by Online Platform Operators.’”
The association also expressed concerns about reverse discrimination against domestic platform companies. It said, “The Platform Act is expected to determine dominant online platform operators based on domestic sales and the number of domestic platform users. Since global companies often do not disclose such data citing trade secrets, the Platform Act is likely to apply mostly to domestic platform operators. In this case, foreign platforms will gain indirect benefits, raising concerns about reverse discrimination against domestic platforms and weakening global competitiveness. Even if global companies are subject to this law, they will only be regulated in their domestic business sectors, so they will not face significant difficulties growing in the global market.”
Finally, the association emphasized, “Korea is in a unique situation worldwide where domestic and global platforms are fiercely competing, which is the result of free market competition. Leaving it to market competition is the best industrial policy.”
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