SEJONG– The head of South Korea’s antitrust regulator said Monday he will push to revamp the country’s fair trade rules to better monitor online giants, such as Kakao Corp., amid the growing concerns over the government’s lack of control in new industries.
The move came after nearly all services by Kakao — a tech giant with a vast business portfolio ranging from mobile messenger KakaoTalk to online banking and ride-hailing services — suffered a massive disruption last month due to a fire at its data center near Seoul.
The incident raised the alarm not only on how the country depended on a single provider for various services but also on how the company multiplied its business portfolio without being properly monitored by regulators.
“Platforms have been connecting providers and customers, creating innovative services while cutting transaction costs,” Fair Trade Commission Chairperson Han Ki-jeong said during his first meeting with reporters since starting his job in September.
“However, as we saw from the Kakao incident, a dominant platform may also neglect its innovative efforts or social responsibilities due to a lack of competitive pressures,” the chairman added.
Han said the FTC especially plans to review whether online platform operators have violated rules by exercising voting rights on affiliates through financial arms.
He was apparently referring to the case in which K Cube Holdings, a company wholly owned by Kakao’s founder, Kim Beom-su, exercised its voting rights with its stakes in Kakao.
The South Korean law bans financial affiliates from exercising voting rights on non-financial sister firms.
Han added South Korea needs to cope with the platform operators’ dominant power by considering their unique nature while respecting their creativity as much as possible.
He said the antitrust regulator is currently seeking to revise laws to bolster reviews on merger and acquisition projects of online service providers as well.
The regulator said it is also seeking to curb the so-called “dark pattern” practices online as well, which trick customers into making payments or joining certain services without being adequately informed of their actions.
The FTC chief added that South Korea will tighten its grip on unfair business practices by other conglomerates, including intra-affiliate trading.
“We plan to continue investigating the unlawful succession of management power, support on controlling families and unfair internal transactions to secure an advantage in the competition,” Han said.
Still, South Korea plans to revise fair trade rules to lift excessive regulations and ease burdens on local firms, including raising the amount of intra-affiliate deals that need to be filed publicly, he said.
Currently, companies are obligated to file details on inter-affiliate transactions for deals above 5 billion won (US$3.8 million), or those taking up 5 percent or more of their assets.
The FTC plans to continue its communications with various parties to further improve the fair trading rules, Han added.
Source: Yonhap News Agency