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Antitrust watchdog’s bill aimed to regulate online platforms faces hurdles

The National Assembly of South Korea (Yonhap)
The National Assembly of South Korea (Yonhap)

A bill from South Korea’s antitrust regulator aimed to govern dominant e-commerce platforms is still pending in the National Assembly due to a tug of war between two government bodies -- the Fair Trade Commission and the Korea Communications Commission.

In the meantime, platform operators and local customers have been raising their concerns, viewing the regulatory move as excessive market intervention.

A survey conducted by Korea Startup Forum showed Monday that around 61 percent of respondents were against the government’s new restrictions on companies that operate as e-commerce platforms, particularly those that provide delivery services such as Coupang. Only 26.2 percent of survey participants said that they support the government’s new regulation.

The bill, drafted by the country’s antitrust watchdog in September last year, aims to prevent unfair trade practices in the e-commerce platform sector.

The FTC said the new bill was designed to limit abuses of market power in the e-commerce industry and prevent contract issues that could jeopardize local small and mid-sized enterprises.

E-commerce platform companies would be levied a hefty fine under the bill if they are found to be involved in abusive or illegal business activities, according to the FTC.

The given bill however, has been pending ever since the FTC submitted it to the National Assembly in January as the KCC raised its objection to the bill.

While the issue was sent to the parliamentary National Policy Committee, the KCC claimed that the issue should be classified as an ICT issue and therefore should be dealt by the parliamentary Science, ICT, Broadcasting and Communications Committee. Rep. Jeon Hae-sook, a ruling party lawmaker and member of the ICT committee, has also proposed a separate bill regarding platform operators that is in line with the KCC’s demands.

The KCC’s claim is that the laws related to e-commerce platforms fall under the jurisdiction of the KCC and that the FTC’s bill partly overlaps with the Telecommunications Business Act, through which local platform operators could suffer from double regulations.

As tension escalated within the assembly, the National Assembly Secretariat noted that lawmakers should consider the market concerns and ensure that the new regulatory framework does not inhibit innovation of the up-and-coming industry.

The ruling Democratic Party of Korea has met with representatives from both committees last week, but little progress has been made.

“The final decision is yet to be made but the proper way is for the National Policy Committee to work on its pending bill (as submitted by the FTC),” said an official of the National Policy Committee.

“The KCC could, of course, add its views to the government bill but it should not be the other way around.”

The ruling party’s target is to pass the FTC version of the bill by March at the latest, officials said.

The ongoing discord has pushed the FTC to postpone its plan to announce its revision to the Electronic Commerce Consumer Protection Act.

The antitrust watchdog was going to announce the details of its revision to the e-commerce act in January, which is expected to include terms that bind online platform operators to take responsibility for consumer damages in e-commerce transactions.

By Shim Woo-hyun (ws@heraldcorp.com)
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