The Korea Fair Trade Commission (KFTC) has decided to review the designation of dominant business entities, which is at the core of the Fair Competition Promotion Act (the Platform Act for short). This means that virtually, the Korean market watchdog will review the designation from scratch. Industry insiders reacted to the decision by saying that it has become impossible for the KFTC to designate dominant business entities.
“We are communicating widely with domestic and foreign industries and stakeholders and discussing various alternatives including alternative designation systems with an open mind,” said Cho Hong-sun, chairman of the KFTC at a briefing at the Sejong Government Complex on Feb. 7. “We will take into account the impact of the bill on the market and collect more opinions.” The Platform Act looks to pre-designate a small number of monopolistic platforms as dominant operators and strengthen the regulation of four power-abusing behaviors, including a ban on showing favoritism for sister companies in making deals or giving orders. The idea is to strengthen a monitoring system to prevent misconduct before it occurs.
However, the KFTC said that the review means that the market watchdog will take a breather and will not discuss softening regulations. When asked whether a pre-designation system will be scrapped, a KFTC official said, “We are open to various alternatives, including the pre-designation system, and listening to opinions.” He added, “We are not immediately scrapping the designation system, but we will further review whether there are other alternatives with an open mind as to whether they are necessary.”
“We are in the process of consulting with ministries and collecting stakeholder opinions about the bill,” the official explained as for the delay in making the bill public. “We will glean and reflect additional academic and expert opinions and check various alternatives.”
“We’ll just have to wait and see,” industry insiders said in response. “We think that the legislation is virtually water under the bridge.”
The key point of the Platform Act is to select and pre-regulate dominant market players. If this part is missing, the bill itself becomes meaningless, according to the industry insiders.
“It will be a big challenge to draw a clear conclusion on whether to include overseas platforms such as Google and Apple as regulation subjects,” said an industry insider. “The KFTC does not even have an accurate picture of foreign big tech sales in Korea, and there is also a question of how practical the KFTC’s regulations will be possible given trade friction concerns.”
Some industry insiders believe that the legislation has virtually gone down the drain. “Revisiting the part of pre-designating a dominant operator means that the bill itself has become meaningless,” said an industry insider. “The government has decided to revisit the designation of a dominant operator, which is the core of the Platform Act. The industry insider said that effectively going back to the drawing board means that the legislation reached the point of no return.