Fair Trade Commission to Focus on 'Eradicating Digital Unfair Practices' This Year... Strengthening Surveillance of New Types Like Metaverse and NFT

2022 Business Promotion Plan

[Sejong=Asia Economy Reporter Joo Sang-don] The Korea Fair Trade Commission (KFTC) has identified "eradication of unfair practices in the digital sector" as its top priority task for this year. While strengthening surveillance of unfair practices in the platform sector, it will also expand its monitoring scope to include metaverse and non-fungible tokens (NFTs). Additionally, to protect the rights and interests of small business owners and consumers in platform transactions, the KFTC will re-pursue the enactment of the "Online Platform Fairness Act" and a comprehensive revision of the "E-commerce Consumer Protection Act."

On the 4th, the KFTC announced its "2022 Major Work Plan" containing these details.

The KFTC presented its key core tasks for this year as ▲ promoting competition and enhancing consumer rights in the digital economy ▲ creating an inclusive trading environment between large and small-medium enterprises ▲ establishing sound governance and transaction order in large business groups.

◆ Strengthening surveillance of unfair practices in innovation sectors = This year, the KFTC plans to focus monitoring on platform operators’ abuse of monopoly power, such as preferential treatment of their own products in mobility and online shopping sectors leading to monopolization of related markets, and "multi-homing restrictions" in app markets that hinder tenant companies from transacting with competing platforms, thereby entrenching monopolistic market structures.

It will also strengthen monitoring of unfair trade practices related to intellectual property rights, such as demands for secondary copyright transfers in webtoon and web novel sectors and blocking entry of competitors in music copyright fields. Furthermore, the KFTC will check whether consumer protection mechanisms such as consumer information provision and withdrawal rights are functioning properly in new types of digital content transactions using metaverse and NFTs.

As part of institutionalizing the basic norms of a digital fair economy, the KFTC will actively push for the enactment of the Online Platform Fairness Act (OnPla Act), which has been stalled in the National Assembly for over a year. It also plans to specify market definition and dominance assessment criteria reflecting platform characteristics and establish review guidelines illustrating typical types of competition-restricting acts. To respond to the transfer and strengthening of platform dominance through mergers and acquisitions (M&A), it will also pursue supplementation of corporate merger review standards.

To build a system that guarantees consumer rights, the KFTC will revise standard terms and conditions for online shopping and gaming to protect not only consumers’ registration information but also personal data automatically collected after registration. It will also update consumer dispute resolution standards for digital and ICT products, including electric vehicle battery component retention periods and compensation criteria for mobile communication (5G) and ultra-high-speed internet outages.

◆ Creating an inclusive trading environment between large and small-medium enterprises = The KFTC will revise standard transaction contracts for online shopping malls and TV home shopping sectors, which have rapidly expanded due to the spread of non-face-to-face consumption, to promote voluntary win-win culture between large and small-medium enterprises. To improve transaction conditions and strengthen negotiation power for small businesses and small merchants, it will improve the franchise information disclosure registration and publication process to provide necessary information to prospective franchisees more promptly. Specifically, when a franchisor applies for registration of an information disclosure document, a public version of the disclosure document will be accepted and disclosed immediately upon review commencement (on average within 3 days after receipt).

Additionally, the KFTC will establish detailed procedures for disclosing payment terms for subcontractors of large business groups and methods and procedures for adjusting subcontract payments through the Korea Federation of SMEs. It will also set the proportion of franchisees who must give prior consent when franchisors conduct advertising and promotional events that impose costs on franchisees.

The KFTC will conduct focused inspections on subcontracting transactions in the automobile sector undergoing transition to electric vehicles and strengthen monitoring of industries with high exclusive transaction ratios, such as chemicals. This is part of enhanced monitoring and inspection of difficulties faced by parts suppliers amid rapid industrial structural changes.

◆ Establishing sound governance and transaction order in large business groups = This year, the KFTC plans to improve the rationality of the designation system for large business groups by preparing definitions of the "same person" (controlling person) and rationalizing the scope of related persons. Specifically, the Corporate Group Division is reviewing ▲ ways to define or stipulate the "same person" in laws or regulations ▲ legal issues and specific clause improvements when designating foreigners as the same person ▲ scope of related persons.

Furthermore, to promote ESG (environmental, social, governance) management, the KFTC will identify governance-related disclosure items and shift disclosure methods from simple listing to user-friendly formats.

It will expand disclosure of internal transaction information in logistics and IT service sectors, which have high internal transaction ratios, to include not only sales but also purchases, and strengthen disclosure of trademark use transaction information to encourage sound trademark transaction practices.

◆ Korea Air-Asiana M&A review expected as early as early February = The KFTC recently sent the review report on this case. It plans to receive opinions from the companies under review by the 21st. Although the opinion submission period is generally four weeks, it has been shortened to three weeks for this case to expedite the review process.

A KFTC official said, "(The schedule for the plenary meeting) depends on how many issues remain," adding, "If the merger applicant accepts a significant portion of the review report prepared by the secretariat, the plenary meeting can be held sooner accordingly."

The KFTC’s review of the Hyundai Heavy Industries and Daewoo Shipbuilding & Marine Engineering merger will proceed after the European Union (EU) decision. The EU competition authority is scheduled to announce its merger review results on the 20th.

KFTC Vice Chairman Kim Jae-shin said, "We will establish a competitive market structure and effective review infrastructure through M&A reviews," adding, "We will actively respond to M&As in new industries such as e-commerce, software, and bio, and swiftly and thoroughly review and handle restructuring-type M&As in sectors like aviation."

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