FTC vows to crack down on platforms’ unfair practices that stifle innovation

Fair Trade Commission Chairperson Han Ki Jeong speaks during a Maekyung Economist Club lecture held at Maekyung Media Center in Seoul on April 18. [Photo by Lee Chung-woo]

South Korea’s antitrust watchdog has issued a warning that it will increase sanctions against any unfair practices by big tech companies in the platform and contents businesses.

Fair Trade Commission Chairperson Han Ki Jeong said he is determined to crack down on business practices that stifle innovation and competition during a Maekyung Economist Club lecture held at Maekyung Media Center in Seoul on Tuesday.

The warning comes after Google LLC was recently slapped with a 40 billion won ($30.1 million) fine for unfair trade practices that banned local game makers from releasing their content on a rival app market.

The National Assembly is currently discussing the enactment of the Online Platform Intermediary Transactions Fairness Act and other regulations aimed at correcting the monopolistic practices of big tech companies. In addition to this, the FTC is reviewing the need for legal revisions through its task force of experts on system improvement, the top antitrust regulator said.

In January, the FTC launched the task force for online platform regulation improvement which is scheduled to hold its fourth meeting this month. The task force is examining the need for revision of the country’s Fair Trade Act to regulate big tech companies more effectively.

In its previous three meetings, the task force reportedly focused on Germany’s amendment to its competition restriction law. In 2021, Germany revised its law to introduce the concept of “businesses with overwhelming influence in market competition” as a criterion for determining their market dominance.

Unfair trade practices in the field of content, such as webtoons, are also subject to focused regulation. Earlier this month, the FTC said it would investigate whether video streaming platforms, such as Netflix, are taking advantage of content producers or interfering with competitors’ businesses. The FTC commissioned a study to analyze the transaction structure and potential unfair practices in the domestic video streaming service market.

The FTC also emphasized the need for policies to encourage innovation, such as improving the system for reviewing corporate mergers and acquisitions. The FTC will continue to review M&As of big tech companies on a general basis, but will relax regulations to promote competition, such as extending exemptions from filing for M&As that are less restrictive of competition.

Rationalization of the conglomerate regulation system is also one of the appeasement measures proposed by the FTC.

While the FTC will continue to monitor unfair internal transaction practices that undermine fair competition, such as unfair family succession and support for affiliates, it plans to improve the system by raising the threshold for disclosure in line with the country’s economic growth.

An amendment to the Enforcement Decree is on track for enactment to raise the threshold for disclosure of internal transactions to 10 billion won ($7.52 million) from the current 5 billion won.