Issues

The KFTC ICT Task Force is Reorganized as the Digital Markets Response Team

  • DATE WRITTEN : 2022-03-21
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On January 27, 2022, the Korea Fair Trade Commission (\"KFTC\") announced that it reorganized its Information and Communications Technology Task Force (\"ICT TF\") into a more comprehensive division called the Digital Markets Response Team in light of the multi-sided nature of digital platforms and recent changes (e.g., technological advances) in the global and domestic environment surrounding the digital platform market.

First created in November 2019, the ICT TF has been handling major KFTC cases involving the ICT industry, with a focus on abuse of dominance by platform operators. Since then, the increasingly complex issues arising in the digital market due to its multi-sided structure have prompted the KFTC to reorganize the ICT TF and supplement its capabilities to better respond to these different issues (e.g., monopolization, abuse of superior bargaining position against online vendors, consumer protection issues such as restriction on consumer choice).

The Digital Markets Response Team consists of new subdivisions dedicated to digital consumers to reinforce its response to related issues, strengthening international cooperation with foreign competition authorities and facilitating market communication with market leaders and other government agencies. Through the reorganization, the KFTC plans to more organically and coherently respond to the rapidly transforming digital market, and strengthen communication on all fronts in order to gain a better understanding of the digital market and increase its technical expertise.

1. Goals and operation plans of the Digital Markets Response Team subdivisions

Three of the Digital Markets Response Team\'s subdivisions will be dedicated to the KFTC\'s policies and cases concerning Digital Monopoly, Digital Gap-Eul (i.e., transactions between parties with unequal bargaining power), and Digital Consumer issues, while the Digital International Cooperation and Market Communication subdivisions will focus on strengthening the KFTC\'s communication efforts with external parties.

Digital Monopoly Subdivision
(Goals) Prevent and strengthen monitoring of monopolistic conduct by dominant online platforms (e.g., self-preferencing, hindering competitors\' business activities) to promote innovative competition
(Operation plan)
- Swiftly conclude an ongoing investigation into exclusionary conduct in the semiconductor industry
- Once relevant procedures are completed, commence deliberation on a case involving an app market operator that allegedly prevented new game products being released on competing app markets
- Swiftly process self-preferencing cases in the mobility industry

Digital Gap-Eul Subdivision
(Goals)
- Address issues between transacting parties with unequal bargaining power
- Find ways to ensure shared growth between platform operators, online vendors and small business owners
(Operation plan)
- Promote enactment of the proposed Fairness in Online Platform Intermediary Transactions Act
- Announce the results of the voluntary correction of unfair trade practices in the accommodation booking app industry, and facilitate the creation of an ecosystem of voluntary shared growth

Digital Consumer Subdivision
(Goals)
- Monitor and address new types of conduct designed to deceive consumers (e.g., use of dark patterns)
- Ensure availability of consumer choice and sufficient information for consumers to make informed decisions
(Operation plan)
- Promote the proposed comprehensive amendment to the Consumer Protection in E-Commerce Transactions Act
- Conclude deliberation on a case involving an over the top (OTT) service provider that allegedly unfairly prevented consumers from withdrawing their subscriptions
- Conduct a survey on the status of procedures for terminating subscription-based services
- Inspect whether consumer protection mechanisms (e.g., provision of product/service information, allowing withdrawal of subscription) are properly implemented in the context of newly-emerging digital content transactions
(e.g., related to metaverse, non-fungible tokens)

Digital International Cooperation Subdivision
(Goals) Create opportunities to continuously cooperate with foreign competition authorities
(Operation plan) Engage in ongoing international discussions on how to respond to the digital economy (e.g., through the OECD\'s Competition Committee, International Competition Network)

Market Communication Subdivision
(Goals)
- Expand communication channels with market participants (e.g., digital platforms, online vendors, consumers) and enhance the KFTC\'s understanding of the digital market and technologies
- Reinforce the support system for strengthening the KFTC\'s technical capabilities (e.g., by building a network of technology experts)
(Operation plan) Research, jointly with expert groups, recent developments in the five industries that are undergoing major structural change amid the transition into a digital economy (i.e., finance, platform mobility, media content, automotive, retail), and announce the results of such monitoring efforts

2. Implications

The new Digital Markets Response Team seems to show the KFTC\'s determination to enhance its level of expertise regarding the rapidly changing ICT sector, conduct comprehensive analyses from a legal, industry, and policy perspective and reinforce monitoring of relevant markets for abuse of dominance and unfair trade practices by ICT companies. We also expect the KFTC, through the Digital Markets Response Team, to expand its law enforcement efforts to protect consumers in online platform transactions involving new technologies (e.g., metaverse, non-fungible tokens), continue to push forward with its ongoing investigations in the ICT industry and work on enacting the Fairness in Online Platform Intermediary Transactions Act and the comprehensive amendment to the Consumer Protection in E-Commerce Transactions Act.

Going forward, companies operating in the digital market are advised to closely monitor the operations of the Digital Markets Response Team and its law enforcement activities, and given the KFTC\'s emphasis on international cooperation in law enforcement in the digital markets, companies should keep abreast of developments at foreign competition authorities.

Kim & Chang Newsletters (4.Feb. 2022)

https://www.kimchang.com/en/insights/detail.kc?sch_section=4&idx=24536&lawCurPage=2&lawSchSection=4&kncCurPage=1&kncSchSection=2&scroll=1600
      
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