'Gift Delivery Fee Shift' Kakao Voluntarily Corrects Instead of Fine for Abuse of Power

FTC Initiates Consent Decree Procedure

Yonhap News

Kakao, which was investigated by the Fair Trade Commission (FTC) on suspicion of abusing its power by unfairly charging delivery fees to vendors using the 'Kakao Gift' service, has decided to prepare a voluntary corrective plan instead of facing sanctions.

On the 20th, the FTC announced that it had decided to initiate the consent decree procedure requested by Kakao regarding allegations of violating the Large-Scale Distribution Business Act.

The consent decree is a system where a business operator proposes a reasonable corrective measure such as restoration or damage relief, and the FTC, after collecting opinions from stakeholders, recognizes its validity and promptly closes the case without determining illegality.

Although it does not make a judgment on illegality, it is regarded as a means to effectively remedy consumer damage and quickly restore competitive order.

The FTC has been investigating whether Kakao violated the Large-Scale Distribution Business Act by passing delivery costs onto vendors and charging commissions on the total sales price, which included delivery fees.

Before receiving the FTC’s review report, Kakao submitted a voluntary corrective plan, stating that rather than contesting the legal judgment, it would improve the transaction order in the online shopping mall market and promote coexistence and cooperation with vendors.

The main content of the consent decree application is to guarantee vendors the choice of delivery types and to improve the system so that even if free delivery is changed to paid delivery, consumers can purchase products at the same price as before without additional burden.

It also proposed coexistence measures including support plans worth approximately 9.2 billion KRW for vendors, conducting fair trade education for affiliated executives and employees responsible for vendor-related tasks, and introducing a Compliance Program (CP) to activate compliance management.

This initiation decision is the first case applied to an online shopping mall since the consent decree system was introduced into the Large-Scale Distribution Business Act in July 2022.

The FTC explained, "Considering the nature of the case, the effect of the corrective measures proposed by the applicant on improving transaction order, protection of vendors as transaction counterparts, and the balance with the expected level of sanctions, we decided to initiate the consent decree procedure."

It added, "We comprehensively considered recent trends where vendors prefer free delivery methods, the fact that vendors joined the platform knowing this situation in an environment with many online businesses, and that promptly implementing the corrective measures proposed by Kakao aligns with the interests of vendors and the public."