On January 6, 2022, the KFTC released for public comments its proposed Review Guidelines for Regulations Against Abuse of Dominance and Unfair Trade Practice by Online Platform Businesses (Draft Guidelines). The KFTC will accept comments on the Draft Guidelines through January 26, 2022.
1. Summary of the Draft Guidelines
A. Applicable Scope
The Draft Guidelines will apply to “online platform businesses,” which include (1) online platform mediation services, (2) online search engines, (3) SNS, (4) digital content providers, (5) OS providers, and (6) online advertisement service providers.
The Draft Guidelines explicitly provide for extraterritorial application – in line with that of the Korean antitrust statute, i.e., the Monopoly Regulation and Fair Trade Act (MRFTA).
B. Key Characteristics of Online Platforms
The Draft Guidelines describe the following key characteristics of online platforms: (1) crossside network effect; (2) economies of scale; (3) importance of data; and (4) tipping effect and the accompanying concern that enhanced entry barriers will reinforce any existing monopolistic/ oligopolistic market structure.
2. Considerations in Determining Illegality
A. Relevant Market
Under the Draft Guidelines, the KFTC will apply the Review Standards for Abuse of Dominance and the Merger Review Standards in defining the relevant market. However, the KFTC may consider other unique aspects of online platforms, such as (1) multi-sided markets, (2) “free” services, and (3) dynamic market situation.
Under the Draft Guidelines, in determining whether an online platform has dominance in the relevant market, the KFTC will apply the Review Standards for Abuse of Dominance and the Review Guidelines on Unfair Trade Practice. However, the KFTC may also consider the following unique characteristics of online platforms.
C. Anticompetitive Effects
Under the Draft Guidelines, in assessing the anticompetitive effects of the conduct of online platforms, the KFTC will apply the Review Standards for Abuse of Dominance and the Review Guidelines on Unfair Trade Practice. However, the KFTC may also consider the following unique aspects of online platforms.
3. Types of Illegal Conduct
The Draft Guidelines enumerate major categories of anticompetitive conduct by online platform businesses and, for each such category, specify the applicable provisions of the MRFTA and the unique factors considered. The Draft Guidelines also list specific examples of each such category.
As the global economy increasingly revolves around online platform services, there is rising concern over abuse of dominance by major online platforms, such as interfering with market entry or expanding dominance into related markets. With the Draft Guidelines, the KFTC seeks to enhance regulatory enforcement against such conduct by specifying unique factors to be considered in defining the relevant market and in assessing the dominance and anticompetitive effects of online platforms. In addition, by enumerating major categories of illegal conduct by online platforms, the Draft Guidelines are expected to help prevent such conduct and to provide for some measure of regulatory foreseeability for both online platforms and users. However, because the Draft Guidelines introduce various new considerations in assessing the conduct of online platforms, it remains to be seen how they will apply in practice.