[2022 National Audit] Fair Trade Commission Chair: "KakaoT Focused on Generating Monopoly Profits... Thorough Investigation on Legality"

"Platform Monopoly, Indirect Impact on Kakao Incident... Strict Regulation"
"Self-Regulation Includes All Contents of Onple Law... Please See If It Produces Results"

Chairman Han Ki-jung of the Korea Fair Trade Commission responding at the National Assembly's Political Affairs Committee audit held on the 7th. In the back row, No Tae-moon (wearing a yellow mask), Head of Samsung Electronics MX Division, and Namgoong Hoon, CEO of Kakao, are attending as ordinary witnesses. Chairman Han also attended the comprehensive audit of the Political Affairs Committee on the 21st. (Image source=Yonhap News)

[Asia Economy Reporter Moon Chae-seok] On the 21st, Han Ki-jung, Chairman of the Korea Fair Trade Commission (KFTC), stated, "We will thoroughly investigate whether Kakao Mobility (Kakao T) abused its dominant (monopoly) market position and enforce the law accordingly."

Chairman Han made this remark during the comprehensive audit of the Fair Trade Commission by the National Assembly's Political Affairs Committee, responding to Rep. Kim Hee-gon of the People Power Party, who said, "An investigation should be conducted to determine whether Kakao T made unfair demands to its partner companies by abusing its dominant market position, and sanctions should be imposed."

The Fair Trade Commission has been investigating since September last year, following reports from civic groups, whether Kakao Mobility restricted competition by blocking passenger call services to competitor franchise taxis such as Wooty and Tada. Currently, market analysis and legality reviews are underway.

Rep. Kim stated, "Originally, Kakao T allowed other companies' franchise taxis to receive calls for free and operate, but starting last year, right after signing partnership agreements with Makaron Taxi and Banban Taxi, Kakao T blocked calls to franchise taxis of other companies that did not have partnerships," adding, "Other platform franchise taxis must establish partnerships and pay commissions to receive Kakao T calls." He further questioned, "Isn't Kakao T trying to maintain its monopolistic market position by cutting off free calls if other platforms form partnerships?"

In response, Chairman Han said, "I think so," and added, "As the taxi call market becomes monopolized, it appears that Kakao Mobility is focusing on generating monopoly profits."

Regarding Kakao T's market share in the taxi call market, he said, "I understand it is over 90%." Chairman Han also mentioned the previously investigated case of Kakao Mobility's franchise taxi (Kakao T Blue) call favoritism, stating, "We plan to deliberate on it soon" and "We will conclude it promptly."

Regarding the recent Kakao 'blackout' incident, Chairman Han said, "The monopolization of online platforms indirectly influenced the Kakao incident. Risk management was inadequate in a monopolistic environment with little competitive pressure," and emphasized, "There is a need to strictly regulate monopolization."

Chairman Han stated, "We are preparing review guidelines on the abuse of dominant (monopoly) market positions by online platform operators that consider not only sales but also the number of users and traffic, and plan to finalize them within this year," adding, "To prevent reckless corporate expansion, we will revise the merger and acquisition (M&A) review standards reflecting platform characteristics by early next year."

Regarding the report of these measures to President Yoon Seok-yeol the day before, he said, "The President made many remarks about the harms of online platform monopolies, and I reported that we will continuously review not only the review guidelines but also legal systems to prevent and control these harms."

When Rep. Kang Byung-won of the Democratic Party pointed out that "instead of trying to regulate monopolistic companies only with guidelines (administrative rules), the Fair Trade Act should be amended," Chairman Han replied, "The review guidelines concretize the current law, so they have binding force," and added, "We will consider legislation taking into account overseas legislative examples and other factors."

Regarding the enactment of the Online Platform Fairness Act (On-Platform Act), which mainly regulates the obligations of platform operators toward tenant companies, he said, "The On-Platform Act regulates contracts, contract termination, and unfair trade practices, and discussions on self-regulation including these contents have begun, with topics already set," emphasizing, "Please watch the outcomes."

He also mentioned, "The topic of commissions has also been confirmed as a subject of self-regulation discussions beyond the On-Platform Act," and said, "We will first try to promote self-regulation."

However, Chairman Han said, "If the On-Platform Act legislation proceeds with bipartisan agreement, I will sincerely engage in it."

Regarding the criticism that "Kakao's business terms of use may violate the Terms and Conditions Act," he said, "We are reviewing whether there are unfair parts in Kakao's terms of use."

Regarding the Fair Trade Commission's organizational restructuring, including the separation of investigation and policy functions, when Rep. Park Sung-joon of the Democratic Party expressed concern that "the chairman might become a figurehead and there could be arbitrary actions like those of the Board of Audit and Inspection," Chairman Han said, "To alleviate such concerns, the chairman and vice chairman will have authority over managing the investigation division."

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