"When Reviewing Corporate Mergers Across Platforms, Competition Restrictions with External Markets Must Also Be Considered"

Fair Trade Mediation Agency, 2021 Law and Economics Group (LEG) Final Presentation

[Asia Economy Reporter Joo Sang-don] Professor Lee Ki-jong of the Department of Law at Sookmyung Women's University stated on the 15th, "In future reviews of corporate mergers involving platform companies, the cross-market strategies of platform companies should be reflected, and the impact on external markets, that is, secondary related markets, should also be considered."

On this day, Professor Lee made this proposal while presenting on the topic "A Study on Competition Law Review and Regulatory Measures Regarding the Impact of Corporate Mergers Among Platform Operators on Competition in Multiple Markets" at the "2021 Law and Economic Analysis Group (LEG) Final Presentation" hosted by the Korea Fair Trade Mediation Agency.

Professor Lee explained, "The single market approach, which defines the platform as one market including all sides of the platform to reflect the interaction between the two sides of the platform in competition analysis, risks ignoring the different competitive relationships on each side of the platform, such as Uber and taxi companies," and added, "If the side where the competition-restricting effect occurs is defined as the relevant market, and the other side that substantially affects competition in that side is defined as the secondary related market, the different competitive relationships on each side can be appropriately reflected."

As considerations for determining whether a secondary related market exists, he presented ▲ whether the merging parties or their competitors hold a dominant position in the external market ▲ whether businesses operating in the relevant market require the dominant business in the external market to access customers ▲ whether there are essential input factors and capabilities commonly required by businesses operating in both the relevant and external markets ▲ whether data obtained in the external market can be integrated with data obtained in the relevant market.

Additionally, at the presentation, studies on demand substitutability and competitive relationships between Over-The-Top (OTT) online video services and multichannel paid broadcasting services, as well as surveys on the status and necessity of regulation regarding debt guarantee restrictions under the Fair Trade Act, were discussed.

The presenters compared and analyzed OTT services and existing multichannel paid broadcasting services in terms of price, channel composition, and functions, and presented analysis results of the competitive relationship between the two services from the perspective of consumer demand substitution. Furthermore, based on an analysis of the status of Total Return Swaps (TRS) and capital replenishment agreements, which are known to perform functions similar to debt guarantees under the Fair Trade Act, opinions on the necessity of regulating financial transactions similar to the current debt guarantee restriction system were presented.

Kim Hyung-bae, President of the Mediation Agency, who attended the presentation, said in his congratulatory remarks, "The results of the LEG research project have focused on discovering research topics that can be used as important reference materials not only in academic discussions but also in the policy-making and law enforcement processes of the Fair Trade Commission," and added, "From 2022, the LEG research project will be reorganized into the 'Fair Trade Academic Research Support Project,' and we will make further efforts to advance academic research in the field of fair trade."

The Mediation Agency plans to publish and distribute the "LEG Final Research Report" at the end of 2021 based on the discussions among presenters and commentators at this final presentation.

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