[Asia Exclusive] Seongwook Cho: "Platform Fairness Act Essential to Strengthen Corporate Responsibility and Protect Consumers"

Chairman Seongwook Cho of the Korea Fair Trade Commission

'Joseongwook-style' Policies Emphasized Since Inauguration
"ICT Business Operators Must Be Diligently Regulated for Abuse of Monopoly to Promote Market Innovation"
Concerns Over Industry Trade Secret Leaks Addressed: "Not Algorithm Disclosure but Disclosure of Key Principles"

[Sejong=Asia Economy Reporter Joo Sang-don] "If the 'Online Platform Fairness Act' and the 'E-commerce Act,' which regulate transaction relationships centered on platforms, are enacted or amended, platform companies' accountability will be strengthened, market transparency will improve, and the rights and interests of tenant companies and consumers can be robustly protected."

On the 9th, Joseongwook, Chairman of the Korea Fair Trade Commission (KFTC), reiterated the will and necessity to enact the Platform Fairness Act in an interview with Asia Economy. The Platform Fairness Act is one of the 'Joseongwook-style' policies. Since his inauguration in September last year, he has emphasized the 'active role of the competition authority' to foster a market ecosystem where innovation occurs amid the 4th Industrial Revolution by stating, "We must diligently regulate unfair monopoly abuse by information and communication technology (ICT) business operators to promote market innovation."

◆ "Baemin-Yogiyo Corporate Merger Approval, Decision Within This Year"= Two months after his inauguration, in November last year, he established and activated a dedicated ICT team under the KFTC Secretariat. Based on this, which strengthened the KFTC's expertise and drive in new industry sectors such as ▲online platforms ▲mobile ▲intellectual property (IP), he announced the 'Policy for Eradicating Unfairness in Online Platforms and Digital Fair Economy' in June this year. This included tasks such as addressing power imbalances between platforms and tenant companies, consumer protection, and prevention of monopolies. The core is the Platform Fairness Act to establish a sound transaction order between platforms and tenant companies. The Platform Fairness Act concretizes the achievements of the ICT dedicated team's activities. The Platform Fairness Act is currently under legislative notice, and the E-commerce Act is in the stage of collecting opinions from business operators and consumers before drafting the bill.

The Platform Fairness Act draft presents mandatory items for platform operators when drafting contracts. The main contents include ▲criteria for determining the method and order of exposure of goods and other information on online platforms, including the impact of commission exposure methods and order ▲specific details of online platform intermediary services provided to tenant companies and the criteria and procedures for charging commissions for these ▲contract duration, renewal and content change procedures, reasons and procedures for contract termination ▲criteria and procedures for starting, restricting, or suspending online platform intermediary services.

The platform industry is concerned that disclosing the criteria for exposure order may lead to trade secret leaks. Regarding this, Chairman Jo said, "The disclosure of exposure order criteria in the Platform Fairness Act does not mean disclosing the algorithm for exposure order but presenting key principles to provide tenant companies with a certain level of predictability." He added, "There will be no issues such as trade secret leaks due to algorithm disclosure or misuse through manipulation of transaction performance. Moreover, it is expected to help platform companies prevent unnecessary disputes and maintain stable business activities." He further stated, "In addition to devices to secure transparency of search results and rankings to protect consumers' rational choice rights, we plan to carefully review related contents and collect opinions from business operators and consumers to prepare a detailed bill for consumer protection in the changed transaction environment."

High Interest in Baemin-Yogiyo Corporate Merger Approval, Reaffirming Policy to "Conclude Within This Year"

The KFTC is accelerating efforts to conclude the approval of the corporate merger between the top two delivery application operators, Woowa Brothers (Baedal Minjok) and Delivery Hero (Yogiyo), within this year. Unlike traditional industries with a 'supplier-consumer' bilateral structure, the approval decision reflects the KFTC's judgment on the multi-sided nature of platforms composed of supplier-platform-consumer and the rapid changes in the delivery app market, i.e., its dynamism, drawing significant public interest. Chairman Jo refrained from commenting on specific issues or positions but reaffirmed the policy to "conclude within this year." He said, "We will analyze the impact on consumers and tenant companies and the market from multiple perspectives in depth and make a swift decision. We expect to hold a plenary meeting within this year to reach a conclusion."

◆ "Will Strengthen Communication with Business Circles on the Three Fair Economy Laws"= Regarding the so-called three fair economy laws?the Commercial Act, the Fair Trade Act, and the Financial Group Supervision Act?pushed by the Moon Jae-in administration, Chairman Jo did not waver from his existing stance despite concerns from the business community. He explained, "The enactment and amendment of the three fair economy laws reflect the era's demand to realize a 'fair and innovative market economy system.' Once passed, these laws will effectively suppress abuse of economic power and pursuit of private interests, enabling a fair competition market economy system." He added, "From the companies' perspective, competitiveness will be strengthened through innovation competition, and management accountability and transparency will be enhanced, increasing corporate value."

Maintaining Existing Position on the 'Fair Economy Law'
"Reflecting Era's Demand for Innovation System... Suppressing Private Interest Pursuit to Realize Fair Economy"

Regarding the Fair Trade Act, which the KFTC is pushing for a full revision again this year following 2018, companies are concerned that expanding the scope of regulation on private interest appropriation will excessively regulate internal transactions, hindering reasonable competitiveness and strategic marketing activities. In response, Chairman Jo emphasized, "The regulation on private interest appropriation allows normal internal transactions but retrospectively regulates only a very small portion of irrational and abnormal internal transactions that unfairly benefit the controlling family. The expansion of the regulation scope aims to close regulatory blind spots to prevent the controlling family's illicit pursuit of private interests and will not stifle normal corporate activities."

However, recognizing the ongoing concerns from the business community, he promised to strengthen communication. He said, "The KFTC is well aware of the concerns raised by the business community. We will sufficiently explain the purpose of the law amendments and listen to companies' opinions to enhance communication with the business sector."

Chairman Jo stated, "We will actively support the National Assembly's discussions to finalize legislative tasks such as the full revision of the Fair Trade Act and the revision of the power imbalance law, and prepare the ongoing tasks such as the enactment of the Platform Fairness Act and the amendment of the E-commerce Act thoroughly before submitting them to the National Assembly. We will continue efforts to create a sound ecosystem where market innovation momentum is enhanced and consumers can fully enjoy its benefits."

※ Chairman Joseongwook's Background

▲ Born in 1964

▲ 1982 Cheongju Girls' High School

▲ 1986 Bachelor of Economics, Seoul National University

▲ 1988 Master of Economics, Graduate School, Seoul National University

▲ 1994 Ph.D. in Economics, Harvard University Graduate School, USA

▲ 1994 Assistant Professor, Department of Economics, State University of New York, USA

▲ 1997 Research Fellow, Korea Development Institute (KDI)

▲ 2003 Associate Professor, Department of Business Administration, Korea University

▲ 2008 Visiting Researcher, International Monetary Fund (IMF)

▲ 2012 Head Professor, Graduate School of Business, Seoul National University

▲ 2015 Vice President, Korean Finance Association

▲ 2010?Present President, Korean Financial Information Society

▲ 2015?Present Professor, Department of Business Administration, Seoul National University

▲ September 2019?Present Chairman, Korea Fair Trade Commission

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