Reason for proposal

As online platforms have become highly influential in the digital market era, unfair behavior by large platforms that use their monopolistic position hinders fair competition in the market, harming the rights and interests of the users.

However, since limitations are experienced in regulating the unfair behavior of online platforms by the system under the existing Monopoly Regulation and Fair Trade Act, which has been designed for the traditional market to the digital market, it is necessary to provide a separate regulatory system for online platforms. Many major countries, such as the EU countries and the US, are also in the process of introducing new regulations to curb the unfair behavior of online platforms and protect the users.

Therefore, the bill has been proposed to provide an institutional foundation for the development of a fair market for online platforms, including legislation that contains regulations to prevent he operators of online platforms from abusing their dominant market position, so as to protect the rights and interests of the users.

Main contents

a. This Act is designed to prevent the abuse of market dominance by the operators of online platforms and to promote fair and free competition by strengthening fairness and transparency in the use of online platforms, thereby fostering creative entrepreneurial activities, protecting consumers, and promoting the balanced development of the national economy (Article 1 of the draft).

b. The Act defines "online platform services" as services that facilitate interactions between users or between users belonging to different groups through online platforms, including the provision, use, trading, and exchange of goods, services, information, and contents. It also defines "online platform operators" as persons or entities that are engaged in the business of providing online platform services, and other key terms such as "online platform users" (Article 2 of the draft).

c. The Act provides that online platform operators with an average market capitalization or equivalent fair market value of issued shares of KRW 30 trillion or more should report their online platform services to the FTC when their average annual turnover is KRW 3 trillion or more, and online platform services with an average monthly number of users of 10 million or more, or whose average monthly number of user businesses exceeds 50,000 (Article 5 of the draft).

d. The Act provides that, in cases where an online platform service declared to the FTC meets the requirements for market dominance and where the FTC's market research shows that an online platform service that is not subject to declaration to the FTC meets the requirements for market dominance, the FTC may designate the operator of such an online platform providing the relevant online platform service as the “operator of a market dominant online platform” (Article 6 of the draft).

e. The Act provides that the FTC should administer the market-dominant platform services offered by market-dominant online platform operators by listing them (Article 7 of the draft).

f. The Act prohibits the operators of market-dominant online platforms from abusing their dominant position, such as self-preferencing, bundling or tying, multi-homing, restricting of data movement and access, or demanding preferential treatment (Articles 8 to 14 of the draft).

g. The Act requires the operators of market-dominant online platforms to disclose matters concerning their market-dominant platform services in order to protect the rights and interests of online platform users, including the terms and conditions of their market-dominant platform services (Article 15 of the draft).

h. The Act requires the operators of market-dominant online platforms to prepare an annual report comprising a business overview, complaint handling status, and information disclosure status regarding their market-dominant platform services and to submit it to the FTC (Article 16 of the draft).

i. The Act provides that the intermediaries of online platform services and business operators using online platform services should faithfully fulfill their transactional obligations as stipulated in their intermediary transaction contracts (Article 17 of the draft).

j. To ensure fairness in online platform brokerage transactions, the Act provides that online platform brokers should perform such obligations as those for issuing brokerage transaction contracts, providing prior notice of termination of brokerage transaction contracts, and archiving documents related to brokerage transactions (Articles 18 to 20 of the draft).

k. The Act prohibits online platform intermediaries or brokerage service providers from unfair trade practices, such as forcing online platform users to purchase goods or services that they do not want to purchase, and also requires them to pay the proceeds from their sales of goods and services within 40 days of their sale, and requires them to respond to the requests of user organizations for consultation meetings (Articles 21 to 24 of the draft).

l. The Act allows the FTC to conduct market surveys for the purpose of designating market-dominant online platform operators, market surveys of the actual status of online platform services, and those for improving the related systems (Articles 26 to 28 of the draft).

m. The Act allows the FTC to investigate violations of the Act and, as a result of the investigation, impose dispositions such as correction orders, recommendations, or fines on violators. It also introduces a consent resolution system that enables online platform operators to voluntarily resolve unfair transactions and actively remedy any damages inflicted on online platform users (Articles 29 to 35 of the draft).

n. The Act allows the FTC to issue a temporary suspension order for all or a part of the services of a market-dominant online platform operator if it is clear that the latter has violated the provisions prohibiting the abuse of its dominant position and if it is urgently required to prevent the spread of damages to online platform users (Article 36 of the draft).

o. The Act introduces an injunction claim system so that any person who suffers or is deemed likely to suffer damages due to an online platform service operator’s violation of the provision prohibiting the abuse of their market-dominant position may apply to the court to prohibit or prevent such violation (Article 38 of the draft).

r. If an online platform service operator causes damages to a user due to a violation of the Act, it will be liable to compensate the user for any damages incurred, unless it proves that the damages are not the result of its willful intent or negligence (Article 39 of the draft).

s. The Act provides that the FTC should establish the Advisory Committee on the Online Platform Sector and consult the said committee when designating a market-dominant online platform operator based on the results of its market survey, when allowing a consent resolution or issuing a temporary cease-and-desist order, and when advice is necessary for other reasons or causes (Article 40 of the draft).