South Korea president pledges to break up eCommerce monopoly

“Those abusing their vested interests and monopoly power in detriment to competition and consumer welfare cannot be tolerated,” President Yoon said. — The Korea Herald

SEOUL: President Yoon Suk Yeol has pledged stricter corrective measures and law enforcement on eCommerce players to curtail their dominance in South Korea’s online market, claiming these marketplace operators were bullying mom-and-pop vendors and undermining consumer choice.

This will accompany the Yoon administration’s proposal of a new law to restrict business activities of eCommerce companies designated as “dominant platform business entities,” which was announced later on Tuesday.

At a Cabinet meeting held in the presidential office in Seoul, Yoon highlighted growing calls to curb the power of companies running online platforms that connect consumers with providers of goods or services via mobile apps.

“Vendors say their advertising costs and commission fees they pay to (eCommerce) platforms often chip away at their earnings, and eventually, they have nothing left in their pocket,” Yoon said.

Dozens of online commerce players, such as Naver, Kakao, Coupang and Woowa Brothers, as well as multinational service providers like Google and Apple, operate in South Korea.

Once the monopoly power of those eCommerce players substantialise, vendors and consumers “would be left with no other choice,” Yoon said, while making it difficult for new eCommerce players to enter the market.

“Those abusing their vested interests and monopoly power in detriment to competition and consumer welfare cannot be tolerated,” Yoon said.

This comes in line with the Fair Trade Commission’s (FTC) move to introduce a bill to respond to or prevent unfair online market practices, while not distancing itself from the principle of “self-regulation” to ensure free market competition.

Under the proposal, those designated as “dominant platform business entities” would be disciplined for a range of “foul practices” once their actions could not be justified.

These include a so-called “multihoming” practice, under which an eCommerce operator impedes a vendor from exposing itself to a competitor’s platform in parallel, as well as an offer of advantages to platform operators’ own service over other vendors.

FTC chairman Han Ki-jeong told reporters at the Government Complex Seoul Tuesday that the bill would be necessary for regulators to keep up with the fast-paced market domination of eCommerce firms.

Han added that the “dominant platform business entities” could face corrective actions or penalty charges for their foul play.

But the FTC did not provide details about the selection criteria for “dominant” eCommerce players, or the time frame for the legislation.

FTC vice-chairman Cho Hong-sun said the scale of the eCommerce firm, such as the firm’s revenue or market capitalisation on the stock market, is far from the absolute criteria to determine the firm’s dominance in the market. — The Korea Herald/ANN