By Lazar Radic
South Korea lately deserted plans for the Platform Competitors Promotion Act (PCPA), laws impressed by the European Union’s landmark Digital Markets Act (DMA), which aimed to ascertain strict competitors guidelines for digital platforms comparable to Google, Apple, Amazon, and Meta. As an alternative, the Korea Honest Commerce Fee (KFTC) and President Yoon Suk Yeol’s authorities have expressed help for amendments to the present Honest Commerce Act.
Whereas another and extra aggressive framework proposed by the opposition social gathering in July modeled on the PCPA should go the Korean Nationwide Meeting, the amendments proposed by the Yoon administration are touted as a extra palatable various to the DMA mannequin, following issues that ex-ante digital-competition guidelines would strangle innovation and development and put home firms at a drawback.
However regardless of some notable variations, the proposed amendments draw on a number of the similar flawed ideas because the PPCPA. Specifically, in circumstances the place designated digital platforms are accused of self-preferencing, tying, or imposing most-favored nation (MFN) clauses or restrictions on multi-homing, the amendments would elevate fines, basically reverse the burden of proof, and permit interim orders together with stop and desists to be issued instantly.
To make sure, the proposed amendments are a marked enchancment on the DMA. They’d not solely prescribe market-share thresholds as a prerequisite for corporations to be caught by the brand new guidelines, but in addition require a case-by-case exhibiting of dominance. It additionally seems — although it isn’t sure — that they’d give focused firms extra leeway to mount a protection, comparable to by exhibiting pro-competitive efficiencies.
However the proposed amendments additionally seem to duplicate lots of the DMA’s flawed ideas, comparable to putting the burden of proof on the enterprise operator. On the floor, it’s onerous to see the rhyme or purpose for extending this discriminatory remedy to a heterogeneous vary of firms and companies.
Under that floor evaluation, nevertheless, the rationale turns into clear when one understands the proposed amendments as an extension of a broader protectionist agenda coupled with efficient regulation of dominant home platform companies. It doesn’t take a lot of a leap of logic to conclude that the modification’s thresholds and scope had been reverse-engineered to disproportionately seize a pre-selected group of profitable, largely U.S.-based know-how firms which have disrupted conventional industries and established home incumbents.
Certainly, the first purpose the Platform Competitors Promotion Act has been postponed was as a result of the ruling Folks Energy Social gathering (PPP) and the federal government had been persuaded that the brand new guidelines would additionally put South Korean corporations at a aggressive drawback. However why ought to they put any firm at a drawback?
As I’ve argued with Geoffrey Manne and Dirk Auer in a paper forthcoming within the Berkeley Enterprise Legislation Journal, the true purpose of digital competitors laws is to redistribute rents, shield opponents, and degree down “gatekeepers” by hamstringing their aggressive place—even on the expense of client welfare. With the proposed amendments, the KFTC and the federal government seem to need to “degree down” U.S. tech firms like Google, Apple, and presumably Coupang. Other than harming South Korean customers, nevertheless, this could additionally unnecessarily pressure bilateral commerce relations with the U.S., one in every of South Korea’s major buying and selling companions.
Whereas conventional antitrust legislation accounts for business idiosyncrasies on a case-by-case foundation, it usually treats firms equally, no matter their enterprise fashions or the services they promote. Imposing ex-ante digital-platform laws alongside competitors guidelines may result in double jeopardy. Nevertheless, introducing these exogenous ideas for oversight of digital platforms into the present antitrust statute would possibly subvert the prevailing system’s logic by emphasizing bigness, structural presumptions, and sui generis guidelines in ways in which may finally unfold to different sectors and undermine the integrity, consistency, and predictability of the legislation.
There’s a widespread false impression in South Korea {that a} “international regulatory consensus” helps subjecting digital platforms to heightened regulatory requirements. However regardless of the EU’s intense advocacy and vociferous claims of regulatory management, no such consensus exists. Lots of the arguments that underpin that supposed consensus have been challenged, such because the notion that self-preferencing is all the time dangerous, that closed platforms are inherently anticompetitive, and that dimension and market construction are good proxies for aggressive outcomes. Additional, solely a handful of nations have really handed ex-ante digital competitors guidelines, whereas many key jurisdictions, together with the USA, haven’t. The DMA’s supposed “Brussels Impact” has not materialized, as gatekeepers proceed to carve out inferior variations of their merchandise for the EU market. South Korea ought to proceed to hunt to keep away from an analogous destiny by reconsidering the enactment of ex-ante DMA-style regulation or ex-post guidelines that, though nominally totally different, finally inflict the identical flawed strategy to digital markets. Such an strategy may stunt innovation in Korea and create pointless commerce frictions within the U.S.-South Korea bilateral relationship.
Lazar Radic is assistant professor of legislation at IE Legislation Faculty, Madrid, the place he teaches administrative legislation, financial regulation, and competitors legislation. He’s additionally senior scholar for competitors coverage on the Worldwide Middle for Legislation & Economics, Portland.
