Korea’s FTC to toughen reviews on platform sector M&As

South Korea’s antitrust body is set to strengthen reviews on acquisitions for different businesses in the platform industry to resolve the problems of monopoly in the sector as the recent nationwide service disruptions of an online giant Kakao Corp. raised concerns over its aggressive expansion.

The Fair Trade Commission will also prepare guidelines to consider factors on the specificity of the platform businesses such as the number of users and traffic when reviewing service operators’ abuse of monopoly power.

FTC Chairperson Han Ki-Jeong said on Friday that he has reported to President Yoon Suk-yeol on the previous day on measures to promote competition in “the monopolized online platform market.”

That came as a fire at a local data center on Oct. 15 interrupted Kakao’s services across the board including not only its flagship messaging app KakaoTalk but also taxi hailing, navigation, mobile games and all other services linked to the household-name chat application.

“Risks were not properly managed in a monopoly with low competition pressure,” Han told lawmakers. “The monopolization of online platforms indirectly affected the Kakao crisis.”

The FTC plans to focus on competition restrictions through market definition, market concentration and economic analysis when it reviews heterogeneous business combinations in the platform industry.

The antitrust watchdog had been checking only factual data for M&A deals in the sector, which were believed to have no competition issues, in reviews that are completed within just 15 days.

TO PREVENT MARKET CONTROL THROUGH ONE PLATFORM

The FTC is set to overhaul guidelines on consideration factors, which reflect the characteristics of mergers and acquisitions in the platform industry, for determining market definition, market concentration and competition restrictions.

The regulator will consider if a dominant player in a certain online business could expand its control to other sectors through acquisitions since various services are connected to one platform. It will also check if such a market leader makes it difficult for newcomers to start businesses or blocks competitors through takeover deals.

The body aims to revise the review criteria on business combinations in early 2023 after completing research on it this year.

It plans to prepare its online platform monopoly review guidelines this year to toughen standards on the abuse of monopoly power in the platform sector. The guidelines will include criteria on market definition and market dominance considering the nature of the online platform industry.

The FTC will reflect the criteria for calculating market share such as online platform service operators’ ability to collect and hold data, as well as the number of users, in addition to sales, for example, when evaluating their market dominance.

The regulator is also set to present types of major violations such as restrictions on multihoming that directly or indirectly keeps customers from using competitors’ online platforms.

It will also strictly enforce laws on illegal practices that limit rivalry to promote competition.

Write to So-Hyeon Kim at alpha@hankyung.com
Jongwoo Cheon edited this article.