[비즈한국] Companies sometimes make decisions that are difficult to explain based on money alone. Understanding the laws or systems hidden behind those decisions allows for a deeper insight into the underlying circumstances. ‘Useful Business Tips (Useful Business Laws)’ introduces clues to help understand business trends.
Fair Trade Law is primarily enforced by a state agency called the Korea Fair Trade Commission (KFTC). Since the basis for enforcement lies in laws and government policy, it is only natural that the level and direction of enforcement are swayed by the administration’s policies or intentions.
For this reason, to grasp the enforcement trends of Fair Trade Law, it is necessary to keep an eye on the KFTC’s annual work reports and joint announcements by relevant ministries on specific issues. The campaign pledges mentioned by presidential candidates before a new government takes office are also extremely important data. This is because they allow one to predict what themes will be emphasized during the upcoming five-year term.
Looking at the Lee Jae-myung administration’s pledges in general, it is evident that to overcome the rapidly changing external environment, low birth rates, and low growth, the focus is on growth rather than distribution. Most of the new government’s top 10 pledges are focused on the economy and industry. In particular, it identified the ‘6 major growth engines’ as AI, bio, content, defense, energy, and manufacturing, all of which are sectors where large corporations play a major and significant role.
One of the new government’s top 10 pledges is the ‘promotion of vitality for households and small business owners, and the realization of a fair economy.’ The meaning of ‘fair economy’ here is not clearly defined. In the past, the realization of a fair economy was viewed as an effort to resolve structural imbalances caused by ‘gap-eul’ (superior-subordinate) relationships. Against that background, laws such as the Agency Act, the Franchise Business Act, the Large-Scale Retail Business Act, and the Subcontracting Act were extensively revised and strengthened.
However, looking at this pledge book, the phrase ‘fair economy’ does not appear to be used to address ‘gap-eul’ relationships. Rather, it is mentioned in relation to concepts such as stock market reorganization, strengthening shareholder returns, and expanding the inflow of foreign investors while emphasizing the need for amendments to the Commercial Act.
Perhaps for this reason, the fair trade sector among the new government’s pledges generally seems to be at the level of supplementing matters that have been discussed since the past, with the main points as follows:
➀ Enactment of an Online Platform Act and the establishment of a transparent and fair online platform market through it
➁ Strengthening the bargaining power of economically vulnerable groups, such as franchise owners, agency owners, and online platform resident businesses, through the introduction of collective bargaining rights
➂ Enhancing the bargaining power and rights of small and medium-sized enterprises (SMEs) by strengthening the effectiveness of the delivery price linkage system, mandating the use of standard subcontracting agreements for public construction, and improving criteria for assessing the appropriateness of construction subcontracts
➃ Preventing the theft of technology from SMEs by establishing a court-ordered document submission system for damages lawsuits, creating victim relief funds, and strengthening support for relief from unfair trade practices
What seems most important and potentially controversial among the pledges is the ‘enactment and regulation of an Online Platform Act.’ In its pledge book, the new government specifically mentioned details such as “building a fair delivery culture by prohibiting discrimination in platform brokerage commission rates and introducing a commission cap system.”
There has been much discussion regarding the enactment of an Online Platform Act. Looking at the contents of previously proposed online platform bills, they designate dominant online platform operators subject to regulation based on factors like user count and market share, and prohibit unfair trade practices such as self-preferencing, tying, restricting multi-homing, and demanding most-favored-nation status. Violations are subject to sanctions such as corrective orders, surcharges, and temporary suspension orders.
As seen in the above, the main target of the Online Platform Act is likely to be a few IT giants. Because of this, it was even seriously concerned that, unusually for a Fair Trade Law issue, the enactment of the Online Platform Act would trigger backlash from the U.S. government or Congress, becoming the core of Korea-U.S. trade friction.
The domestic IT industry is also against the enactment of the Online Platform Act. They have argued that it is an unclear and excessive regulation, that its effectiveness is unproven, and that it would lead to problems such as overlapping regulations, the stifling of the IT ecosystem, and the impairment of consumer welfare. Some have also pointed out that domestic platform companies like Naver035420 and Kakao035720 play a role in preventing foreign platforms from monopolizing the domestic market, and since there is still a gap in corporate size compared to foreign companies, support is needed rather than regulation.
For these reasons, the direction had shifted toward revising the Fair Trade Law and relevant notifications rather than enacting a new Online Platform Act. However, with the new government mentioning the Online Platform Act in its pledge book, interest in whether the law will be enacted is being rekindled.
Fair Trade Law is effectively enforced exclusively by the KFTC. Due to the nature of government agencies, a law must be enacted to allocate relevant budgets and organize departments for full-scale enforcement to take place. This can be seen from cases where, although existence existed through notifications in the past, enforcement was revitalized by enacting the Large-Scale Retail Business Act and the Agency Act with the same content. This means that there are limits to enforcement through existing laws and notifications alone.
As such, whether to enact the Online Platform Act is an extremely sensitive topic, and both sides have solid arguments. Consequently, contrary to the direction of the pledge book, a prevailing view is that the government will pursue a path of resolving problems indirectly by supplementing existing policies to address ‘gap-eul’ relationships between platform operators and resident businesses, while holding back on legislation due to the need for social consensus on designating and pre-regulating dominant platform operators, as well as the potential for trade disputes with other countries.
Looking at trade issues with foreign countries or the recent market where growth is urgent, the enactment of an Online Platform Act does not seem easy. However, considering the proportion of online platforms in various transactions, as well as issues surrounding online platforms such as delivery app commissions and the TMON-WeMakePrice (Tim-ef) crisis, it appears that discussions on enactment will continue until a bill is created.