Fair Trade Commission: "Platform Act Is Not a New Regulation"

Rebutting Claims of 'Competitiveness Impact'
"Same Standards Applied to Domestic and Foreign Companies"

When the Fair Trade Commission announced the direction for promoting the ‘Platform Fair Competition Promotion Act (Platform Act)’ last December, the industry has been voicing continuous opposition. The platform industry believes that the Platform Act promoted by the Fair Trade Commission could restrict existing services and thus damage competitiveness. However, the Fair Trade Commission argues that the same standards apply to global companies as well, and since these issues have already been regulated under the existing Fair Trade Act, it is not a new regulation.

First, the industry believes that regulating the Platform Act will only weaken the competitiveness of domestic companies. There is concern that if major domestic companies like Naver and Kakao are subject to preemptive regulations, their service scope could shrink compared to global big tech companies like Google or newly entering foreign platforms.

The Fair Trade Commission holds the position that such concerns are difficult to accept because the Platform Act applies the same standards to both domestic and foreign companies. Since the same standards are applied to all companies operating in Korea, global big tech companies will also be subject to the same regulations. Furthermore, the Fair Trade Commission emphasized that it has experience investigating major foreign companies such as Google and Qualcomm and imposing high-level fines, so it can exert the same influence on overseas companies.

The industry also pointed out that consumer-friendly services provided by major platforms might be restricted. The Platform Act lists ‘self-preferencing’ and ‘tying’ as representative prohibited acts that restrict market competition, leading to speculation that various services like Naver Pay provided by Naver could be regulated as prohibited acts.

"Not a new regulation never seen before... No problem if anti-competitive unfair practices are not committed"

The Fair Trade Commission explained that it comprehensively assesses the consumer welfare enhancement effect and only regulates when it determines that market competition has been significantly hindered. In particular, the Fair Trade Commission is promoting regulations that designate different dominant businesses in each market by distinguishing the markets entered by platform companies. Therefore, it explained that services introduced by major companies to enhance consumer convenience are not uniformly subject to regulation.

The industry also worries that the preemptive regulatory approach will excessively increase the burden on companies. The Fair Trade Act requires the authorities to bear the burden of proof for violations stipulated in the law and seek court rulings. In contrast, the Platform Act is a kind of preemptive regulation that pre-defines which companies are dominant and what prohibited acts are problematic under the regulations, so to avoid sanctions, companies must prove that the authorities’ regulatory application is incorrect. It is argued that this burden of proof will also affect active startup mergers and acquisitions or business expansion.

The Fair Trade Commission views that since the Platform Act does not create new regulations never seen before, there will be no problem as long as anti-competitive unfair practices are not committed. In fact, the acts such as self-preferencing by platform companies mentioned by the Fair Trade Commission have already been regulated under the current Fair Trade Act, so it is not about establishing new regulations. However, by pre-defining prohibited acts through preemptive regulation, companies can be encouraged to refrain from anti-competitive unfair practices on their own, and the authorities’ regulatory application speed can be accelerated, enabling active response to the platform economy, the Fair Trade Commission stated.

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