Platform Act Issue: Specification of 'Abuse of Position'... Double Penalty for Violations

Jongwook Cho, Chairman of the Korea Fair Trade Commission. (Photo by Korea Fair Trade Commission)

[Asia Economy Reporter Moon Chaeseok] The Fair Trade Commission (FTC) puts the most effort into determining which actions constitute 'abuse of trading position' and how to define and delineate markets in new industries when establishing new regulations.

Since his early days in office, FTC Chairman Cho Sung-wook, who emphasized the fairness of online platforms, set the penalty limit at "twice the amount of violation" and specified acts of abuse of position.

According to the FTC on the 3rd, the draft bill for the "Fairness in Online Platform Intermediary Transactions Act" was prepared on the 28th of last month and will be open for public comment until the 9th of next month.

The bill focuses on imposing fines of up to 1 billion KRW on major platform companies such as Naver and Coupang, as well as food delivery and accommodation app companies, if they engage in so-called "gapjil" (abuse of power).

The FTC outlined cases of abuse of position under the Fair Trade Act as follows: ▲forcing tenant companies to purchase goods or services they do not intend to buy ▲coercing the provision of monetary, goods, services, or other economic benefits ▲shifting damages incurred during transactions ▲setting or changing transaction conditions to the detriment of tenant companies or causing disadvantages during implementation ▲interfering with the management activities of tenant companies.

The FTC also established criteria for imposing fines due to abuse of position by platform operators. The fine is set at twice the amount of the violation, with a maximum fixed fine of 1 billion KRW. However, criminal penalties are imposed only for retaliatory acts or failure to comply with corrective orders.

A system to ensure transparency in contracts to prevent abuse of position was also introduced. Platform operators are required to prepare and provide contracts to promote transparency in transactions with tenant companies. Key items must be mandatorily included in the contracts.

The scope of application covers companies with annual commission income (sales) within 10 billion KRW or intermediary transaction amounts within 100 billion KRW, or companies exceeding amounts specified by presidential decree.

The regulation targets not only open markets like Coupang and Gmarket but also food delivery services like Baedal Minjok, accommodation services like Yanolja, ride-hailing services like Kakao Taxi, and portals providing keyword search advertising services such as Naver, Kakao, and Google.

Chairman Cho Sung-wook said, "We paid close attention to establishing a balanced regulatory system that ensures effective law enforcement without hindering innovation in the new platform industry," adding, "This draft bill is the result of careful consideration to effectively improve unfair trading practices in the platform sector while preventing obstacles to industrial innovation."

The FTC plans to submit the revised bill to the National Assembly after collecting opinions from platform operators, tenant companies, stakeholders, and related government departments during the public comment period.

This content was produced with the assistance of AI translation services.