FTC to regulate platform businesses’ monopolistic practices

Dec 20, 2023, 09:29 am

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Fair Trade Commission Chairman Han Ki-jeong speaks about a new bill that would reduce harmful effects of platform monopoly, at the Government Complex Seoul on Dec. 19, 2023./ Source: Yonhap

By AsiaToday reporter Lee Ji-hoon

The Fair Trade Commission (FTC) has proposed a bill to pre-regulate monopolistic platform operators, such as Naver and Kakao. Under the proposal, those designated as “dominant platform operators” would be restricted from engaging in unfair practices, such as favoring their affiliates and preventing multi-homing, or the practice of connecting simultaneously to multiple platforms.

At a Cabinet meeting presided over by President Yoon Suk-yeol on Tuesday, FTC Chairman Han Ki-jeon said that the antitrust regulator would push for the enactment of the “Platform Fair Competition Promotion Act” to prevent disruptions in the market order of monopolistic platforms and protect small businesses and consumers.

The bill proposal was backed by President Yoon Suk-yeol, who ordered the FTC last month to “come up with measures that could reduce monopolistic malpractices of large platform operators.” Earlier, the president also stressed the need for a correction on the behavior of platform operators that “eliminate other competitors, completely dominate the market, and then raise prices.”

Earlier this year, the FTC had formed a task force (TF) to seek ways to promote fair competition in the platform market. After holding discussions nine times, the TF agreed that the current discipline system for the platform market needs to be supplemented, and that the government’s legislative policy judgment is needed.

The bill includes designating a small number of platform operators that are powerful enough to influence the platform market as “dominant platform business entities” and prohibiting a range of foul practices that frequently appear in the market, such as favoring their affiliates and preventing multi-homing.

“We will prepare standards that regulate the abuse of monopoly without hindering innovation of the platform industry, and guarantee platform operators various opportunities to protest, such as submitting opinions before designation, raising objections after designation, and taking administrative litigation,” the FTC Chairman said.

“If platform operators prove there was a legitimate reason for committing foul practices, they will be excluded from the ban,” he said.

The FTC said it had responded to monopolistic platforms’ foul practices through the Fair Trade Act, but its response was too late compared to the speed of monopolistic behavior in the platform market, limiting the recovery of fair market competition.

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