INTERVIEW FTC chief vows to scrutinize monopolistic platform firms for irregularities

Scrutinizing monopolistic online platform firms by introducing timely regulations will be the 2024 policy focus for the country's antitrust agency, in order to prevent those firms from dominating exclusive markets, the head of the Fair Trade Commission said.

“Once monopolized, it is extremely difficult for the digital market to recover its fair competition ecosystem, as the industry is characterized by strong network effects and is closely linked with the winner-takes-all principle,” FTC Chairman Han Ki Jeong said in a recent interview with The Korea Times on the occasion of the New Year.

The chairman reiterated his unwavering willingness to step up monitoring of some online and mobile platform companies whose influence continues to grow exponentially. Their expanding impact has sparked escalating concerns that they may end up wielding “irreversible” monopolistic and abusive business influences unless they are regulated on time, according to Han.

“In 2024, we will advocate for the enactment of a Platform Fair Competition Act, aiming to effectively address any unfair business practices carried out by large platform firms that hold a monopoly,” he said.

The head of the top antitrust authority expressed the strong stance multiple times last year, addressing the seemingly uncontrollable expansion of monopolistic power wielded by dominant market players in the realms of online platforms, e-commerce, and mobility.

The watchdog anticipates that legislating the act will serve as a deterrent, preventing monopolistic firms from participating in potential business irregularities. This, in turn, will facilitate smoother market entries for innovative startups and their potential rivals.

According to Han, the FTC will also refer to the steps taken by the European Union (EU) in enacting the Digital Markets Act designed to ensure that high-tech companies operate in ways that are fair and that promote competition.

“Overseas antitrust authorities are on course to legislate similar acts under the common perception of the harmful effects of platform monopolization,” he said. “The EU and Germany have completed legislations, and the United States and the United Kingdom are proceeding with the legislative process.”

The Korean authority established a special taskforce to discuss the agenda and held nine rounds of talks with experts in the first half of last year, so it can fine-tune details on the platform act. If the act takes effect, designated platform firms are prohibited from unfair business acts such as cross-selling of their services and restriction on users of a certain platform from using others.

“The FTC will pursue the legislation by closely collaborating with relevant government authorities and the National Assembly,” he said. “The move is part of our efforts to boost fair competition and drive more innovation in the market. If startups leave the market due to the unfair business acts by monopolistic firms, the dominant platform operators will end up raising prices for their services, and cast most commission burden to small business owners.”

But the authority promised to listen to possible complaints from platform firms, even after introducing the act.

“Regulators will be prepared to exclude applications if platform operators prove that there was a legitimate reason for their conduct, even though they committed fouls," he said.

Korean Air-Asiana merger

The chief of the agency also pledged to step up communication with overseas counterparts for the timely merger between Korean Air and Asiana Airlines.

Korean Air’s takeover of Asiana Airlines was announced in 2020, but the plan has hit a snag for the past three years amid long-delayed approvals from foreign regulators. But the procedure is nearing an end, with the European Commission (EC) recently sharing its plan to complete its screening by Feb. 14.

Three authorities from the EU, the United States and Japan still did not make a final decision on whether to allow Korean Air’s acquisition of cash-strapped Asiana, citing potential fears that the merger may hamper fair competition in the global aviation industry.

“The foreign authorities are proceeding with in-depth reviews of the merger’s potential impact on the market,” Han said. “Given that the merger has a huge influence on the economy here, the FTC is exchanging active communication with our overseas counterparts and the merging parties, so the examination can be finalized as soon as possible.”

Deregulation for innovative startups

While tightening the regulatory influence on platform firms, the FTC underscored its deregulatory policy direction for startups here.

“We are making concerted efforts to foster the innovative growth of startups and small- and medium-sized enterprises,” he said.

As part of the efforts, the watchdog is moving to deregulate a rule on a market-dominant business operator. Under the current fair trade act, any firm whose annual sales are less than 4 billion won ($3.1 million) is excluded from being categorized as a market-dominant business operator. But the watchdog plans to raise the bar to 8 billion won, so fewer startups are regulated by the act.

“The purpose of the deregulation is for startups to feel less burdened as they seek innovative growth,” Han said.