[비즈한국] Businesses sometimes make decisions that are difficult to explain by money alone. Understanding the underlying laws and systems can provide a deeper look into the situation. ‘Useful Business Legal Tips (Al-Ssul-Bi-Beop)’ introduces clues to help understand business trends.
A recent key topic in the enforcement of the Fair Trade Act is the regulation of online and digital platforms. Naturally, this does not mean regulating the existence of online platforms themselves. The goal is to regulate unfair trade practices that occur in transactions with competing businesses, trading partners, and consumers as online platforms gain market-dominant status.
According to the recent work status report prepared by the Korea Fair Trade Commission (KFTC), "Establishing fair trade order in the digital platform ecosystem" is one of their core tasks. This consists of: △fairer transaction order between platforms and vendors, △resolving the ills of monopoly and oligopoly in the platform market, and △reorganizing the e-commerce system to respond to changes in the digital trading environment.
Such phrases are quite abstract. Looking only at the text, it is difficult to guess specifically what it means or what the KFTC intends to do. However, by synthesizing KFTC documents and media reports, it is possible to predict how the KFTC will approach and regulate online platforms in the future.
First, "fairer transaction order between platforms and vendors" can be understood as an intention to regulate unfair trade practices that have historically occurred in 'gap-eul' (power imbalance) relationships, such as those covered by the Subcontract Act, the Large-Scale Retail Business Act, the Agency Act, the Franchise Business Act, and regulations on the abuse of trading status. The KFTC states that it will promptly push for legislation to "protect vendors and ensure fair transaction order" to achieve this. This refers to enacting the so-called "Online Platform Fairness Act," which has been discussed for several years but has struggled to make progress.
The reasons for the delay include: △arguments that it causes reverse discrimination against foreign platforms as it imposes enhanced regulations only on domestic online platforms, △claims that it is unnecessary legislation because existing laws such as the regulation of abuse of trading status are sufficient, and △concerns about overlapping regulations with the Korea Communications Commission. While the situation remains largely the same, the KFTC is pushing for the enactment of the Online Platform Fairness Act as a new core task following the inauguration of the new administration.
The main contents of the legislation proposed by the KFTC are as follows:
① To effectively respond to unfair practices against vendors, it will establish types of prohibited acts specialized for platform-vendor transactions and ban retaliatory measures.
② To minimize side effects on the market and substantially ease the burden on vendors, it will mandate the disclosure of transaction terms such as fees throughout the entire transaction process and require advance notice of contract changes. It will also expand information disclosure throughout the transaction process by introducing surveys and publication of the status of fees, etc.
③ To strengthen the bargaining power of vendors, it will legalize the right to form associations and introduce a fair trade agreement system.
④ To enhance transaction safety, it will impose obligations on online platforms to comply with payment settlement deadlines and manage funds separately.
Each point of the legislation is significant, and its introduction would clearly have a major impact on the market. While some aspects may seem quite radical, it is an inevitable regulation considering the current state of the domestic online market, where the Timon crisis led to numerous vendors closing their businesses and a market restructuring into a monopoly structure by two or three platforms, granting a few operators dominant status.
Furthermore, the KFTC is reportedly considering introducing a fee cap for delivery services in the restaurant industry, which is characterized by a high proportion of small business owners and the entrenchment of monopoly. Directly regulating fee unit prices in a market economy is awkward, and it is clearly a sensitive topic as it would immediately trigger trade issues if the same standards were applied to foreign platforms. However, considering the reality that more than half of self-employed businesses close within 2 to 3 years, there are many points to consider.
The next topic is "resolving the ills of monopoly and oligopoly in the platform market." To this end, the KFTC plans to strengthen monitoring and response to the misconduct of monopoly platforms by regulating practices such as demands for most-favored-nation (MFN) status, tying, limiting consumer choice, and unfairly restricting the rights of trading partners.
This is a quite difficult problem because the prohibited practices mentioned—MFN demands, tying, and limiting consumer choice—can potentially contribute to service efficiency. For example, let's assume a case where a landlord wants to charge heavy penalties if a schedule is changed or a reservation is cancelled in exchange for renting a space at an exceptionally low price, and an online platform brokers space rental to consumers by including these conditions in various options.
In this case, it could bring positive effects to the space rental market in terms of expanding consumer choice—that is, increasing efficiency—but it is difficult to implement in Korea. This is because the penalty conditions presented by the online platform would likely exceed the penalty amounts set by the KFTC's Consumer Dispute Resolution Standards for the rental sector.
Meanwhile, if Korea emphasizes its own unique regulations to foreign platform operators entering the country, trade issues could arise. Perhaps for this reason, the KFTC maintains a stance of continuously communicating with domestic and international stakeholders regarding platform monopoly regulation and responding to changes in the legislative environment, such as trade negotiations.
Finally, there is the "reorganization of the e-commerce system to respond to changes in the digital trading environment." For this, the KFTC plans to amend the E-Commerce Act to mandate that platforms verify seller information in the event of a dispute and provide it to dispute resolution bodies such as courts. To resolve personal information infringement, it will minimize the information collected by platforms and mandate the consent of the data subject when providing information.
In addition, it will disclose management standards (posting periods, deletion criteria, objection procedures, etc.) for reviews that influence purchasing decisions, increase the level of fines imposed for infringement of consumer rights, and strengthen deterrence against violations by relaxing the requirements for issuing temporary suspension orders. There is also a practically important point: the content requiring foreign platforms to designate domestic agents to protect the rights and interests of domestic consumers in transactions with these platforms.
None of the above content is simple. As has always been the case, stakeholders will present various objections, and trade disputes could even arise. Nevertheless, issues related to online platforms under the Fair Trade Act deserve close attention. The center of the market has shifted from offline to online, and the introduction of some of the items listed above is only a matter of time.