Reason for proposal

The influence of online platforms on the Korean economy is expanding rapidly due to the rapid increase of contact-less online e-commerce caused by the Covid 19 pandemic. The dependence of customers and small businessmen on transactions via online platforms is increasing day by day. While the superior position of online platform brokerage transactions in leading innovation of the digital economy has increased, concerns are also growing over the potential harm to small and medium-sized enterprises (SMEs) and small business owners who rely on these platform services. The scale of online e-commerce has reached approximately KRW 230 trillion, which is 7.7 times more than ten years ago. However, institutional safeguards for platform sellers are still insufficient, including no legally defined sales money settlement cycle.

The recent issue with TMON and WeMakePrice, which caused a controversy recently due to the delayed settlement of sales money for online platform users (platform sellers), indicates that a minimal legal mechanism or system is required to protect platform sellers.

In the case of online e-commerce, the Act on Fair Transactions in Large Retail Businesses is not applied. There is no legal basis for preparing standard contracts under the Monopoly Regulation and Fair Trade Act and to apply fair transaction order such as win-win agreements to online platforms.

Accordingly, the legal measures and mechanisms for controlling growing dominance and unfair transactions of online platforms are insufficient. 

Although the Act on Fair Transactions in Large Retail Businesses and the Fair Transactions in Subcontracting Act do prescribe a sales money payment period for suppliers, they do not provide a legal basis for a sales money payment period by online e-commerce platforms.

The TMON and WeMakePrice incident, with concerns that unsettled payments may approach KRW 1 trillion, is prompting a chain of bankruptcies among approximately 60,000 platform sellers.

Furthermore, it has placed a significant burden on the economy, with the government injecting as much as KRW 560 billion in emergency funds.

Especially, bleeding competition by online platforms focused on expanding their control of the market through monopoly and oligopoly is said to be the main cause of the TMON and WeMakePrice incident.

Therefore, the proposed bill intends to prepare minimal legal mechanisms, such as the establishment of a sales money payment period, in order to guarantee greater fairness in online e-commerce and to prevent the recurrence of such events as the TMON and WeMakePrice incident. 

It also aims to prepare the system, procedures and regulations needed to enhance transparency and fairness in online platform commission transaction relationships; and to establish a fair online platform transaction order by preventing possible disputes between online platform commission businesses and platform users (platform sellers), and by establishing a law to prescribe legal measures for resolving disputes effectively.