Yoon pledges to break up e-commerce market monopoly

This photo shows a deliveryman on a motorcycle and an unmanned delivery robot, which in South Korea serve as a backbone of South Korea's e-commerce ecosystem. (Yonhap)

President Yoon Suk Yeol on Tuesday pledged stricter corrective measures and law enforcement on e-commerce players to curtail their dominance in South Korea's online market, claiming these marketplace operators were bullying mom-and-pop vendors and undermining consumer choice.

This will accompany the Yoon administration's proposal of a new law to restrict business activities of e-commerce companies designated as "dominant platform business entities," which was announced later in the day.

At a Cabinet meeting held in the presidential office in Seoul, Yoon highlighted growing calls to curb the power of companies running online platforms that connect consumers with providers of goods or services via mobile apps.

"Vendors say their advertising costs and commission fees they pay to (e-commerce) platforms often chip away at their earnings, and eventually, they have nothing left in their pocket," Yoon said.

Dozens of online commerce players, such as Naver, Kakao, Coupang and Woowa Brothers, as well as multinational service providers like Google and Apple, operate in South Korea.

Once the monopoly power of those e-commerce players substantialize, vendors and consumers "would be left with no other choice," Yoon said, while making it difficult for new e-commerce players to enter the market.

"Those abusing their vested interests and monopoly power in detriment to competition and consumer welfare cannot be tolerated," Yoon said.

President Yoon Suk Yeol (third from left) speaks during a Cabinet meeting in his office in Seoul on Tuesday. (Yonhap)

This comes in line with the Fair Trade Commission's move to introduce a bill to respond to or prevent unfair online market practices, while not distancing itself from the principle of "self-regulation" to ensure free market competition.

Under the proposal, those designated as "dominant platform business entities" would be disciplined for a range of "foul practices" once their actions could not be justified.

These include a so-called "multihoming" practice, under which an e-commerce operator impedes a vendor from exposing itself to a competitor's platform in parallel, as well as an offer of advantages to platform operators' own service over other vendors.

FTC Chairman Han Ki-jeong told reporters at the Government Complex Seoul Tuesday that the bill would be necessary for regulators to keep up with the fast-paced market domination of e-commerce firms.

Han added that the "dominant platform business entities" could face corrective actions or penalty charges for their foul play.

But the FTC did not provide details about the selection criteria for "dominant" e-commerce players, or the time frame for the legislation.

FTC Vice Chairman Cho Hong-sun said the scale of the e-commerce firm, such as the firm's revenue or market capitalization on the stock market, is far from the absolute criteria to determine the firm's dominance in the market.

By Son Ji-hyoung(consnow@heraldcorp.com)