FTC's new fair trade law aims to curb Naver, Kakao, Woowa Brothers
Korea Fair Trade Commission Chairperson Joh Sung-wook speaks during a press briefing at the government complex building in Sejong City, Monday. / Yonhap
By Kim Jae-heun
The top antitrust watchdog on Monday revealed its new proposed bill that aims to prevent local online platform operators from abusing their power in the market.
As many people begin to order food and groceries online, the hierarchical market structure has put platform operators on top of small and medium enterprises carrying out business there.
One of the biggest problems that the Korea Fair Trade Commission (KFTC) will tackle is the lack of written contracts between the two parties.
Previously, some platform operators had forced small business owners to make verbal agreements when closing deals and did not provide any supporting documentation related to opening a market or restaurant online. This allowed the platform firms to avoid the blame when customers bring up a problem related to the product or service they purchased.
The antitrust watchdog will fine the platform operator up to double the amount of losses that a small enterprise suffers in this case.
The same penalty will be imposed on those who restrict their business partners from doing business on rivals' platforms too.
Recently, the country's No.2 food delivery player Yogiyo, operated by Delivery Hero, was fined 470 million won for banning restaurant owners from selling food at lower prices on other food delivery platforms.
The new law will increase the maximum fine to 1 billion won in this case.
Naver, Kakao and Woowa Brothers will also be obligated to notify their partner enterprises when they want to make changes to or terminate their contracts.
Companies falling under this new law are those with over 10 billion won of revenue or earning at least 100 billion won in commission fees as an open market or food delivery player.
“We couldn't properly regulate online platform operators with the previous legal system. We need private autonomy and soft laws specialized for the online platform industry that is changing at a fast speed,” KFTC Chairperson Joh Sung-wook said.
“The current fair trade act does not contain specific details on what type of contract should be issued between the two parties and the law applies only when large retailers engage in selling products. However, we now want those only providing a platform to connect customers and entrepreneurs to fall under our regulation as well.”
Meanwhile, the legislation has been strengthened in imposing larger fines but reduced the level of punishment. The KFTC said it only wants to curb the firms' intention to carry out unfair trade acts and not limit their business in the field.