Reason for proposal

It aims to promote the healthy development of online platform transactions by ensuring transparency and fairness. Since the Covid-19 pandemic, the influence of online platforms has grown rapidly due to the explosive increase of non-face-to-face transactions. Online shopping transactions increased from KRW 94 trillion in 2017 to KRW 113 trillion in 2018, KRW 137 trillion in 2019, and KRW 158 trillion in 2020. They continued to soar in 2021, the second year of the pandemic, reaching KRW 190 trillion, and looked set to surpass KRW 200 trillion in 2023. 

With the rapid growth of online platforms, the participating vendors' dependence on platform transactions has increased dramatically. In the online platform marketplace, small businesses have to compete for survival on a heavily tilted playing field. Intermediary service providers interfere with the business activities of the participating vendors, such as determining both their selling prices and their business counterparts. Unfair behavior is also prevalent, such as the unilateral unfair passing on of damages incurred in transactions to the vendors.

Currently, there is no provision in the Monopoly Regulation and Fair Trade Act that prevents disputes proactively or improves trading practices. The current law limits the effective response to unfair behavior by online platform brokers.

Therefore, we plan to enact a law that includes procedures for online platform intermediary transaction relationships, regulations on prohibited acts, and institutional devices for dispute prevention and resolution. We also intend to vest the Korea Fair Trade Commission (KFTC) and city mayors and provincial governors with the power to supervise and mediate disputes in order to facilitate and expedite the redress of rights of the vendors who use online platform intermediary services. 

Main contents

a. It requires the providers of online platform intermediary services to issue written intermediary transaction contracts and also requires KFTC to recommend the creation and use of standardized contract forms (Article 7 of the draft).

b. It requires the providers of online platform brokerage services to register the terms and conditions of their brokerage service contracts with KFTC or the relevant city major and provincial governors. Further, it requires KFTC and city and provincial governors to disclose the list of online platform brokerage service providers for which the registration of their terms and conditions has been revoked or canceled so as to ensure transparency in transactions (Articles 8 through 10 of the draft).

c. To protect the rights and interests of the vendors who use the online platform service and improve their status, the Act grants them the right to organize business organizations and the right to request negotiations on trade terms (Article 12 of the draft).

d. It imposes upon the providers of online platform brokerage services the obligation to provide prior notice of any changes to the contents of brokerage contracts and restrictions on brokerage services to the vendors who use the service. It also denies the validity of changes made to brokerage contracts and the termination of contracts that have not been fulfilled when not properly notified in advance (Article 13 and Article 14 of the draft).

e. It defines and prohibits the unfair trade behavior of the providers of online platform brokerage services (Article 15 of the draft).

f. It requires the providers of online platform intermediary services to pay the price of sold goods to the users of online platforms within 40 days of the date on which the consumer's purchase or payment is finalized (Article 16 of the draft).

g. It prohibits the users of online platforms from being penalized for applying for dispute mediation, reporting a complaint, submitting documents in response to a written fact survey, or cooperating with an investigation (Article 17 of the draft).

h, It requires the providers of online platform brokerage services and the users of online platforms to enter into an agreement promising to comply with the laws and regulations related to online platform brokerage transactions. It also requires KFTC to take measures to support such agreements when concluded on a voluntary basis (Article 18 of the draft).

i. The Korea Fair Trade Mediation Board organizes a mediation council to mediate disputes between the provider and users of online platform services. City and provincial governments will also have such a mediation council (Articles 19 through 29 of the draft).

j. The commissioner of KFTC and the mayors and governors of cities and provinces should conduct written fact surveys on transactions entered into between the providers of online platform intermediary services and their users and publish the results thereof (Article 31 of the draft).

k. KFTC may recommend that providers of online platform intermediary services that have violated the Act should prepare and follow corrective measures (Article 34 of the draft).

l. A provider of an online platform intermediary service that is under investigation or review by KFTC may apply for a consensus resolution by preparing corrective measures for resolving their unfair behavior, so as to actively improve the trade order and to relieve and prevent damages to their customer vendors (Article 35 of the draft).

m. KFTC may impose a fine upon providers of online platform intermediary services that violate the requirement to issue and seal contracts in writing, or the provisions prohibiting unfair trade practices and retaliatory actions, within a range not exceeding twice the amount involved in the violation, and may also impose upon them liability for compensating damages incurred by users of their platform services (Article 37 and Article 38 of the draft).