KDI "Online Platform Self-Preferential Treatment Should Maintain Post-Regulation Approach"

The Korea Development Institute (KDI), a government-funded research institute, has expressed the view that it is preferable to maintain the current ex-post regulatory approach rather than introducing a pre-designation system to prohibit unfair practices such as self-preferencing by online platforms. Self-preferencing by platforms can have both anti-competitive and pro-competitive effects, so such behavior does not necessarily lead to anti-competitive outcomes.

The KDI Focus report titled "Competition Policy Directions on Self-Preferencing by Online Platforms," published by KDI on the 21st, contains these insights. Kim Min-jung, a KDI research fellow and the author of the report, stated, "Given the winner-takes-all nature of the online platform market, there is a higher likelihood of serious issues related to abuse of monopoly power, so self-preferencing should be appropriately regulated." However, she added, "Since the sale of a platform’s own products or self-preferencing can also enhance efficiency, it is not desirable to impose a blanket ban, and the potential side effects caused by excessive regulation should not be overlooked."

She further argued that, similar to the existing abuse of market dominance (hereafter referred to as MD) practices, it is preferable to apply the principle of reasonableness and regulate only in cases of unfairness. Kim suggested, "The current approach to regulating MD abuse involves lengthy processes in market definition and determining dominant firms, which can hinder swift responses. Therefore, the focus should shift toward evaluating the economic effects of the conduct." Instead of a rigid approach where the assessment of anti-competitive effects only proceeds after competition relationships are fully established, judgments on competition relationships and anti-competitive effects should be made concurrently.

She also recommended improvements to the current presumptions and recognition criteria for dominant firms. Kim said, "Enhancing accessibility by expanding budgets and specialized personnel related to data so that competition authorities can review market data when necessary will aid in swift judgments regarding the market and dominant firms."

Regarding the pre-designation method of dominant market players, as seen overseas, she viewed that pre-regulating specific firms rather than specific behaviors is undesirable because it could stifle innovation and competition.

Kim stated, "If necessary, pre-designation could be limited to types of conduct where enforcement efficiency is limited and difficult." Representative examples include "self-preferencing in placement by non-public algorithms," such as algorithm manipulation in NAVER shopping and video sectors, and "using non-public data to simply imitate competitors’ products," as seen in Amazon Marketplace.

Finally, she proposed introducing a consent decree system related to platform self-preferencing. Kim said, "As in the European Union’s Amazon Buy Box and Marketplace cases, a consent decree system could enable online platform operators to voluntarily propose corrective measures, allowing for swift remedies." She added, "If the validity of the corrective measures is properly evaluated, the consent decree system could serve as a complementary tool to competition law enforcement, which can often take a long time."

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