Prosecutors Check ‘Gapjil’ Overlooked by Fair Trade Commission... Yeogi Eottae and Yanolja Indicted Without Detention (Comprehensive)

Slap on the Wrist After 5 Years: FTC Imposes Light Fines

SME Ministry and Prosecutors Step In, Overcoming Exclusive Right of Complaint Limits

Lee: "Unfair Power Dynamics in Korean Businesses Are Severe" – Strict Enforcement Stance

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Prosecutors have indicted major domestic accommodation platforms Yanolja and Good Choice Corporation (the operator of Yeogi Eottae), as well as the founder and former CEO of Good Choice Corporation, identified as Mr. Shim, without detention on charges of abusing their superior position to commit unfair practices against partner businesses, in violation of the Monopoly Regulation and Fair Trade Act (MRFTA) and abusing their bargaining position. It is being evaluated that platform companies, whose abuses were nearly overlooked due to the Fair Trade Commission’s lukewarm response, have been held accountable through inter-agency checks and that effective criminal penalties have been imposed.

‘Slap on the Wrist’ After 5 Years, Intervention by Ministry of SMEs and Startups and Prosecutors… Lee: "Unfair Power Dynamics Among Korean Companies Are Severe"

According to the Fair Trade Investigation Division of the Seoul Central District Prosecutors’ Office, headed by Na Heeseok, the case initially began in July 2020 when the Korea Hotel & Hospitality Association filed a complaint. However, the Fair Trade Commission dragged its feet for over five years, ultimately imposing only relatively minor fines—1 billion won on Good Choice Corporation and 540 million won on Yanolja—without any criminal referral. The companies are currently contesting even these fines in administrative lawsuits.

The case, which could have been closed with just the fines, was overturned after the Ministry of SMEs and Startups and the prosecution stepped in. Citing the seriousness of the matter and the significant damage to small businesses, the Ministry of SMEs and Startups exercised its authority to request a referral to the prosecution, which triggered a full-scale investigation. The prosecution, after taking over the case, not only executed search and seizure warrants against the corporations but also uncovered additional charges against Mr. Shim, the founder of Good Choice Corporation, who personally designed and approved the controversial coupon expiration policy and profited approximately 300 billion won by selling the company. Consequently, prosecutors also exercised their authority to refer Mr. Shim for direct prosecution and brought him to court.

This aligns with the current administration’s stance of strictly punishing companies guilty of power abuse. President Lee Jaemyung previously stated during the Fair Trade Commission’s work briefing on December 19 last year, “The unfair power dynamics among Korean companies are so severe that, in other countries, such practices would merit a life sentence or even 100 years in prison.” Prosecutors noted, “Low-level fines have no deterrent effect on companies, and mechanically increasing them ultimately just shifts the costs to consumers and minority shareholders.”

Yonhap News Agency

Profited 37 Billion Won by Forcing ‘One-Day Coupon’ Sales... Ultimately Announced Coexistence Measures

The investigation revealed that the two companies, which hold market shares of 86% (Good Choice Corporation) and 95% (Yanolja), forced motel operators on their platforms to purchase discount coupons and then unilaterally invalidated unused coupons. Notably, Good Choice Corporation inflicted approximately 35.9 billion won in losses by using a particularly harsh tactic of setting the coupon validity period to just one day, while Yanolja also arbitrarily expired about 1.21 billion won worth of coupons.

However, as the prosecution’s intensive investigation began in earnest, the companies, which had previously vowed to fight legal battles to the end, changed their stance. Good Choice Corporation pledged to provide additional coupons with a sufficient validity period to partner businesses if the unused coupons exceeded 10% of their advertising fees. Yanolja also began voluntary restitution procedures, issuing coexistence coupons equivalent to the 1.2 billion won in damages.

It is reported that the prosecution took these voluntary compensation efforts into consideration as mitigating factors. Meanwhile, the Fair Trade Investigation Division of the Seoul Central District Prosecutors’ Office has recently handled cases involving collusion in the sugar, flour, starch syrup, and Korea Electric Power Corporation bid-rigging, as well as Fair Trade Act violations by Youngone Group, DB Group, and HDC. Going forward, the division is expected to focus its investigative resources on collusion and unfair practices involving the four major oil refiners.

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