On January 4, 2022, the Korea Fair Trade Commission (the "KFTC”) announced its 2022 Enforcement Plan (“2022 Plan”). The enforcement plans, published annually by the KFTC, present a comprehensive overview of the KFTC's enforcement priorities for the year ahead.
The 2022 Plan sets out the following, among others, as central tasks: (i) promotion of competition and protection of consumer rights and interests in the digital economy, (ii) creation of an inclusive transactional environment between small and medium-sized enterprises (“SMEs”) and large conglomerates, and (iii) responding to unfair trade practices and consumer harms occurring during the “return-to-normal" phase of the COVID-19 pandemic.
1. Promotion of Competition and Protection of Consumer Rights and Interests in the Digital Economy
As with last year, the KFTC is expected to focus its attention on strengthening law enforcement and making systematic improvements to counteract unfair trade practices in the digital economy. In particular, the KFTC announced its plan to monitor acts that impede incentives for innovation in the digital economy, such as platform operators’ self-preferencing in the mobility and online shopping sectors, as well as the emergence of new types of digital content transactions that involve metaverse and non-fungible tokens.
2. Creation of an Inclusive Transactional Environment Between SMEs and Large Conglomerates
To eliminate unfair trade practices that take advantage of the imbalance of power between SMEs and large conglomerates, the KFTC announced its plan to (a) monitor subcontracting transactions in the automobile sector and strengthen its monitoring of the chemical sector in which exclusive transactions have been more prevalent, (b) inspect unfair trade practices in online sales, outlets, and shopping malls, and (c) monitor unfair trade practices in supplier-distributor transactions in the medical device, apparel, and automobile sales sectors. In addition, the KFTC plans to expand the dispute mediation role of local governments to the subcontracting and wholesale/retail sales sectors.
3. Responding to Unfair Trade Practices and Consumer Harm During the Phased Recovery to Daily Routines from COVID-19
The KFTC plans to tighten its monitoring of major platform operators, such as online travel agencies ("OTAs") and hotel booking apps, as the demand for relevant services is expected to increase during the recovery period from the COVID-19 pandemic. In addition, the KFTC announced that it will review and correct unfair provisions (i.e., unilateral termination, imposition of excessive penalties, etc.) that appear in terms of use of public facilities, such as golf courses, funeral halls and university dormitories.
As with last year, the KFTC’s 2022 Plan continues to stress the importance of heightened monitoring of platform operators and implementation of the relevant regulations to build a fair trade regime in the digital economy sector. Given that the COVID-19 pandemic has accelerated the digital transformation of Korean society, we expect the KFTC to maintain this policy stance for the time being. In addition, the KFTC is expected to continue monitoring undue support to affiliates and promoting the improvement in corporate governance of large conglomerates in line with the recent trend of emphasizing ESG management.
In addition, as the sweeping amendment to the FTL began to take effect at the end of 2021, special attention should be paid to the KFTC’s enforcement of the newly enacted provisions under the FTL, such as classifying information exchange as a new type of illegal collusive conduct, doubling the maximum percentage of revenues that can serve as the basis of administrative fines, and an individual's right to directly seek injunctive relief against unfair trade practices.