Reason for proposal

As the online platform trading market has grown rapidly, replacing the offline trading market, online platform intermediaries with a superior trading position have continuously resorted to unfair trade practices against online platform users, such as the recent case in which Coupang was fined for manipulating its algorithm for its search ranking and operating its standards in an unclear manner, hindering fair competition with small businesses.

The government has announced that it will correct unfair trade behavior on online platforms by instituting autonomous private regulation as a countermeasure. However, we can hardly expect any results from autonomous regulation in a situation where there is no equal status between large companies, such as online platforms, and small businesses.

As it is difficult to respond effectively to unfair trade practices on online platforms under the current fair trade system, the bill aims to provide a fair institutional foundation for online platform intermediary transactions by setting standards for unfair trade practices for online platform intermediaries and introducing systems for organizing online platform users and negotiating fair trade terms.

Main contents

a. Duty to issue written contracts on online platform brokerage transactions (Article 6 of the draft)

1) When an online platform intermediary enters into an online platform brokerage contract with an online platform user, the online platform intermediary should provide the online platform user with a written contract on online platform intermediary services, which should include provisions on its term or duration, modification, and termination.

2) If the Fair Trade Commission (FTC) recognizes that it is necessary to establish a fair online platform brokerage order, it may prepare and encourage the use of a standard contract form for online platform brokerage transactions.

b. Prior Notice of Obligations of Online Platform Intermediaries (Article 7 of the draft)

1) The bill provides that if an online platform intermediary intends to terminate a contract for online platform brokerage services, it should notify the user of the online platform concerned of the reason for the termination at least 30 days before the scheduled date of termination. It also provides that such a termination of a brokerage service contract in violation of this provision will not be valid.

2) It also provides that if the online platform brokerage service provider intends to restrict or discontinue the online platform brokerage service, it should notify the online platform using businesses of the reasons and details for such restriction or discontinuance at least 7 days before the scheduled date thereof. 

c. Provision of standards for unfair trade acts by online platform intermediaries (Article 9 of the draft)

1) It specifically defines the types of unfair trade acts of online platform intermediaries, such as the act of forcing online platform users to purchase goods or services or of offering economic benefits to online platform intermediaries by unfairly utilizing their trading position.

2) It provides that the unfair trade practices of online platform intermediaries should be applied only to those transactions in which the online platform intermediary is recognized to be in a trading position superior to that of the online platform user. The detailed judgment criteria will be determined and published by FTC in consideration of the structure and status of the online platform intermediary trading market.

d. Provision of a system for the organization of online platform operators and negotiation of transaction terms (Article 11 and Article 12 of the draft)

1) Online platform operators will be allowed to form their organization and register it with FTC and city mayors or provincial governors.

2) Registered online platform user organizations may request online platform intermediaries to seek a consultation on the service terms and conditions, including the modification of intermediary service contracts, in accordance with the methods prescribed by the Presidential Decree.

e. Mediation of Disputes between Business Operators (Article 14 and Articles 18 to 20 of the draft)

1) The Korea Fair Trade Mediation Agency will organize a council for the settlement of disputes on online platform intermediary transactions in order to mediate or settle disputes between online platform intermediaries and online platform users. The council will be composed of nine members, including one chairperson.

2) The parties to a dispute or FTC may apply for or request mediation to the Council regarding disputes under this Act. If the mediation process is terminated, the Council will report to FTC the outcome of the mediation or the reason for terminating the mediation process before notifying the parties to the dispute.

3) When mediation of a dispute is constituted, the Council will require a mediation agreement to be signed by the members of the Council who participated in the mediation and the parties to the dispute, and the parties to the dispute will submit the results of their performance of the agreement to FTC.

f. Investigation and disposition by FTC of violations (Article 22, Article 24, Article 26, and Article 28 of the draft)

1) FTC may investigate violations by report or ex officio. When it does or does not impose a disposition under this Act as a result of the investigation, it will notify the parties of the contents and reasons in writing.

2) FTC is authorized to impose corrective orders or fines on online platform intermediaries that violate the obligation to issue written and signed contracts on online platform intermediation services, or the provisions prohibiting unfair trade practices or retaliatory acts.

3) A consent-based resolution system will be introduced for online platform intermediaries that are under investigation or review by the FTC in order to voluntarily resolve unfair service transactions and actively remedy damages to online platform users.

g. FTC's written questionnaire survey (Article 31 of the draft)

1) In order to establish a fair trading order, the FTC will conduct a written questionnaire survey of transactions between online platform intermediaries and online platform users and publish the results.

2) When FTC conducts a written questionnaire survey, it should develop a plan regarding the scope, period, contents, and method of the survey, and the publication of the results of the survey. It may require the surveyed parties to submit data necessary for the survey, such as those concerning their transactions and business status.

h. Online Platform Intermediaries' Liability for Compensating Damages (Article 32 of the draft)

1) If an online platform intermediary inflicts damages on an online platform user in violation of this Act, it shall be liable for compensation of such damages unless it proves that it has not caused such damages by its own willful intent or negligence.

2) It provides that a law court may order an online platform intermediary to submit data as required to prove damages or calculate the amount of damages in a lawsuit for damages due to unfair trade behavior on the part of that online platform intermediary. It also stipulates that an online platform intermediary should not refuse to comply with a court order to produce documents, even if they are trade secrets, when they are necessary to prove or calculate damages.