The main keywords for the Korea Fair Trade Commission under Chairman Cho Sung-wook's leadership this year are ICT

Fair Trade Commission "Will Realize Digital Fair Economy"

Platform Fair Trade Act and Electronic Commerce Act Amendments
Establishment of Guidelines for Review of Unilateral Acts in the Online Platform Sector

Jongwook Cho, Chairman of the Fair Trade Commission. (File photo)

[Sejong=Asia Economy Reporter Joo Sang-don] The Fair Trade Commission (FTC), led by Chairman Cho Sung-wook, has decided to focus its efforts this year on establishing fair trade in platforms. To this end, the recently subdivided ICT (Information and Communication Technology) special task force, divided into app market and O2O (online-to-offline) sectors, will strengthen monitoring of unfair practices by domestic and foreign platform operators, while also creating the Online Platform Fair Trade Act and related review guidelines.

On the 22nd, the FTC announced its 2021 work plan containing these details.

The FTC presented "Establishing Fair Trade Order in the Digital Economy Sector" as the first task in this year's work plan. This means setting basic norms for realizing a digital fair economy. Specifically, the FTC plans to enact the "Online Platform Fair Trade Act" to build a fair and innovative platform ecosystem through win-win cooperation between platform operators and tenant businesses. An FTC official explained, "The Online Platform Act prepared by the FTC was reviewed at the vice-ministerial meeting on the 21st and will be discussed at the Cabinet meeting on the 26th," adding, "The government bill is expected to be submitted to the National Assembly within this month."

The Platform Fair Trade Act is a law regulating unfair practices between platform operators such as Google, Naver, and various delivery applications, and their tenant businesses. Due to the transition to a digital economy, the surge in non-face-to-face transactions caused by COVID-19, and market concentration accelerated by network effects, unfair trade has become a reality in the online platform sector. However, existing policy tools have limitations in effectively responding, so a separate law to regulate this is deemed necessary. In fact, online platforms, as intermediaries, are not subject to the Large-Scale Distribution Act, and the Fair Trade Act lacks provisions requiring contract provision and standard contracts to prevent disputes and improve transaction practices.

Accordingly, the Platform Fair Trade Act obligates platform operators to prepare and provide contracts to tenant businesses, transparently disclosing transaction conditions to prevent disputes in advance, and mandates that key items be explicitly stated in the contracts. It also concretizes and applies the prohibition of abuse of superior bargaining position under the existing Fair Trade Act to fit the characteristics of the platform industry.

Alongside this, the FTC will assign consumer protection responsibilities to platform operators proportional to their involvement in transactions and will push for a comprehensive revision of the "Electronic Commerce Consumer Protection Act" to strengthen prevention and remedy of damages.

The FTC also plans to strengthen the protection base for vulnerable groups amid the digitalization of the economy. It will establish a foundation to prevent damage and protect the rights of small business owners such as franchisees and agencies affected by online sales by franchisors and suppliers. Specifically, for franchisees, it will require mandatory disclosure of the proportion of online sales in information disclosure documents, grant franchisees the right to negotiate online transaction conditions, and allow closure without penalty if sales decline due to headquarters' online sales. Additionally, if suppliers sell online below the agency supply price, agencies will be granted the right to request price adjustments, and the FTC will closely monitor suppliers' prohibitive acts against agencies' online sales. To protect platform workers such as delivery and courier drivers, contracts will be reviewed for voluntary correction, and the distribution of standard contracts will be promoted.

The FTC will also work to create a safe non-face-to-face transaction environment. It plans to correct deceptive practices such as automatic payments without additional notice after free trials convert to paid subscriptions, covert advertising using influencers, and manipulation of review boards. It will also inspect practices like charging delivery fees for order cancellations before shipment in online malls and correct unfair terms such as refund restrictions upon early termination by domestic and foreign online video service (OTT) providers.

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