By Shanker Singham, President, Competere Foundation –
Recent statements by Korea Fair Trade Commission (KFTC) Chairman Ju Biung-ghi regarding the aggressive push for the “Online Platform Fairness Act” should sound alarm bells for global trade and competition policy. Promoted by the Republic of Korea Government (ROKG) as a balanced compromise to regulate digital markets, the Fairness Act is, in reality, a deeply flawed legislative vehicle.
By abandoning traditional, effects-based competition enforcement in favor of rigid, ex-ante operational mandates, the KFTC is engineering an asymmetrical regulatory regime. When we apply the Competere Foundation’s analytical framework to these developments, it becomes clear that the Fairness Act functions as an Anti-Competitive Market Distortion (ACMD)—one that breaches the established “collar” of reasonable competition enforcement to disproportionately target innovative U.S. companies while actively protecting domestic monopolies.
Korea’s Double Standard: EU-Style Drift and Precautionary Antitrust
Sound competition policy is anchored in the protection of consumer welfare, operationalized through the maximization of productive, allocative, and dynamic efficiency. However, under Chairman Ju’s leadership, the KFTC is accelerating an “EU-style big is bad” drift.
The Fairness Act represents a dangerous embrace of precautionary antitrust. Rather than requiring the KFTC to prove actual consumer harm in a defined market, the bill shifts the burden of proof onto online platforms to prove that their ordinary business conduct is “fair.” It imposes prescriptive, banking-style rules—such as mandating platforms to hold 50% of funds in escrow and meet strict 10-20 day payout deadlines—measures globally reserved for licensed financial institutions, not technology intermediaries. Furthermore, the Act calls for the creation of “business user organizations,” effectively introducing collective bargaining into platform-to-business relationships.
Relying on precautionary regulations and broad “unfairness” doctrines inevitably leads to massive Type 1 errors (false positives). Punishing globally accepted, pro-competitive conduct chills investment, deters the rollout of new features, and inflicts severe losses on dynamic efficiency.
Targeting U.S. Leaders While Ignoring Domestic Monopolies
Despite the ROKG’s insistence that the Fairness Act’s lower revenue thresholds will capture domestic firms, the legislation remains per se discriminatory due to its platform-only scope. By exclusively targeting the online platform sector—a space where U.S. companies like Google, Apple, Meta, Netflix, Uber, and Coupang are market leaders—the law acts as a targeted non-tariff barrier, degrading the pillar of international competition in our ACMD model.
The hypocrisy of this approach is glaring when juxtaposed with the KFTC’s treatment of Korean conglomerates. While the KFTC subjects a highly competitive digital sector (where U.S. tech faces off against domestic giants like Naver and Kakao, and Chinese rivals like Alibaba and Temu) to draconian oversight, it actively fosters market concentration for domestic chaebols:
- Aviation: The KFTC recently cleared the Korean Air–Asiana merger, creating a de facto national airline monopoly despite explicit competition concerns raised by the U.S., EU, and Japan.
- Automotive: The KFTC approved the Hyundai-Kia merger in 1999, creating a behemoth that still controls roughly 90% of Korea’s domestic auto sales market.
- Retail & Telecom: Lotte Group, Shinsegae, and Hyundai Department Store control nearly 90% of the domestic retail sector. Samsung Electronics holds 82% of the domestic smartphone market, while KT, SK Telecom, and LG U+ control over 80% of telecommunications.
By turning a blind eye to these entrenched domestic monopolies while suffocating foreign digital entrants, the KFTC is fundamentally degrading the Domestic Competition pillar. This is classic “murky protectionism”—using the guise of competition policy as a strategic tool of industrial policy.
Different Enforcement Standards: The China Model?
The KFTC’s discriminatory posture is most evident in its penalty methodology. The KFTC employs vastly different standards for domestic and foreign entities accused of similar abuses. It routinely uses massive, structurally disruptive fines to challenge the ingenuity of U.S. tech companies:
- Qualcomm: Hit with a monumental $853 million fine in 2016 for patent licensing practices.
- Google: Fined $176 million in 2021 for OS-related practices, despite holding less than 30% of the Korean search market.
- Coupang: Fined nearly $100 million in 2024 for common retail practices like algorithm-based product placement.
In stark contrast, actual domestic monopolies receive a mere slap on the wrist. Naver received an $18 million fine in 2020 (later overturned); Kakao faced a total of $75 million for severe market abuses; and a “record” $207 million fine against Samsung was relegated to a narrow procurement issue regarding corporate cafeteria contracts.
Now, the Fairness Act threatens to empower the KFTC to impose fines of up to 10% of sales based on vague “fairness” standards. While this mirrors the EU’s Digital Markets Act (DMA) penalties, it lacks the DMA’s extensive procedural protections, clear scope limitations, and structured compliance pathways. This represents a severe breach of the procedural and substantive collar that defines legitimate competition enforcement.
Korea’s approach is beginning to look remarkably similar to the Chinese Communist model, where the State Administration of Market Regulation (SAMR) leverages domestic regulations specifically to target foreign businesses (with 80% of adverse approvals since 2008 targeting foreign firms).
Impact of Unsound Competition Policy Implementation and Enforcement on the Poor; What is Fairness?
Chairman Ju makes much of the fact that this type of enforcement and the application of the ex ante framework in the Fairness Act is pro-poor, and so the US should not object to it. The reality is that this unsound competition policy has profoundly damaging effects for Korea’s poor. The fact that it leads to wealth destruction on a massive scale as our ACMD model shows means that the brunt of the damage in GDP per capita terms falls disproportionately on the poorest members of society. If each Korean household loses thousands of dollars each year, then this might be inconvenient for the rich. For the poor is a catastrophe. If it causes the US among other countries to retaliate against these practices, that will be a double hit to Korea’s poor, an astonishing act of economic self-harm. Korean economic policymakers should ask themselves why the KFTC is backing such an extraordinary act.
This is part of a wider malaise, which stems from the use of the word “fair”. Words matter, and the concept of fairness means all things to all people. As such it is an imprecise word, one used to hide a multitude of sins. The only group to whom such legislation and its attendant competition enforcement is “fair” to are status quo, incumbent companies who are not innovative but rely on cosy relationships with government to thwart more dynamic, innovative companies. It continues the protected position of Korean Chaebol and their Chinese firm collaborators, whilst denying market contestability to specifically targeted US firms.
Conclusion
Chairman Ju’s latest push for the Fairness Act is not an exercise in sound competition policy; it is the deployment of an Anti-Competitive Market Distortion designed to handcuff foreign innovators. While Korean companies and aligned quasi-government bodies spend record sums lobbying to ensure U.S. laws do not impact their interests, Seoul is actively constructing an asymmetrical regulatory regime at home.
To restore economic growth and respect bilateral trade commitments, Korea must abandon this “big is bad” legislative drift. The KFTC must return to an effects-based, consumer-welfare standard that protects the competitive process rather than shielding domestic competitors from international rivalry.
For more detailed analysis and economic modeling of how these policies impact both the U.S. and Korean economies, read our comprehensive Korea papers available in the research tab at www.competerefoundation.org.