Legislation targets monopoly practices in mega platform companies

In a significant move aimed at curbing unfair practices and protecting the interests of small and medium-sized businesses and consumers, mega platform companies such as Naver and Kakao are set to face heightened regulatory scrutiny. The Fair Trade Commission (FTC) has unveiled a proposed law, designed to restrict the dominance of select mega platform companies and prevent them from engaging in anti-competitive behavior.

Under the Act on Facilitating Fair Competition of Platform Businesses, companies falling under the “controlling platform businesses” category will be subject to specific regulations. These regulations are crafted to prevent these entities from providing preferential treatment to their products or services and obstructing rival platforms' operations. The ultimate goal is to mitigate the adverse impact on small and medium-sized business owners and consumers resulting from the undue market dominance of these mega platforms. The FTC said it is reviewing to impose a stronger sanction than the one under the existing law on businesses in breach of the law.

The FTC’s plan involves a meticulous evaluation process to designate companies as controlling platform businesses. Factors such as revenue, user base, and market share will be comprehensively considered for each service these companies offer. Specific criteria for designation and a detailed list of prohibited practices will be established through negotiations with relevant ministries, departments, and the National Assembly. FTC Vice Chairman Cho Heung-sung shed light on the rationale behind this legislative initiative, underscoring the limitations of existing efforts to restore competition in an already heavily monopolized platform industry.

President Yoon Suk Yeol, receiving the report during a cabinet meeting, expressed firm opposition to market-dominant entities manipulating their positions to stifle competition and harm consumer welfare. He vowed to implement decisive measures and enforce the new law rigorously to ensure fair competition and protect the interests of both businesses and consumers alike.