SOUTH KOREA Trends and Developments Contributed by: Sang Oh Jeon, Hee Jae Lee, Chiyeol Kim and Seokmin Song, Yoon & Yang LLC
The Supreme Court, however, reversed and remand - ed the Seoul High Court’s decision, recognising the KFTC’s regulatory authority. The court held that the MTA neither specifies regulatory authority nor detailed regulatory procedures for situations where joint con - duct substantially restricts competition; at minimum, the KFTC possesses regulatory authority over joint conduct not reported under the MTA. This Supreme Court decision clarifies that absent explicit provisions in other laws, the MRFTA must apply broadly to all sectors of the economy. Mobile carriers case The KFTC imposed a total fine of KRW96.3 billion on Korea’s three major mobile telecommunications car - riers, collectively controlling over 80% of the domes - tic mobile telecommunications market, alleging they agreed to adjust subscriber number portability to prevent significant subscriber losses by any particu - lar carrier. According to the KFTC, when subscriber losses for one carrier rose notably, the other carriers agreed to lower their own sales subsidies while toler - ating increased subsidies by the losing carrier, thereby adjusting subscriber inflows and outflows. The three carriers have challenged the KFTC’s sanctions deci - sion by filing administrative lawsuits before the Seoul High Court. Additionally, the KFTC imposed fines on furniture manufacturers found to have engaged in bid-rig - ging practices in procurement processes conducted by construction companies for built-in and custom modular furniture. Such enforcement against cartels in industries directly affecting consumers’ daily lives is expected to continue, as the KFTC aims to counteract inflationary pressures in markets for consumer goods. Administrative Sanctions and Litigation Regarding E-Commerce Act Violations Kakao Melon case Amid the rapid expansion of the subscription economy in electronic commerce, the Seoul High Court issued a noteworthy decision concerning early termination of subscription services. Early termination refers to a consumer’s cancellation of a subscription before the expiry of the subscription period and the refund for the unused remaining portion. Korean consumer laws
guarantee consumers the right to early termination for continuing transactions lasting one month or longer. The KFTC imposed a remedy and a fine on Kakao, finding that Kakao violated the E-Commerce Act by failing to adequately disclose to consumers the possi - bility of early termination in selling subscription-based music services through its Melon app, thus engaging in “the use of deceptive acts or practices to attract or transact with consumers”. Kakao subsequently filed an administrative lawsuit challenging this decision. The Seoul High Court held that music streaming ser - vice providers have a good faith obligation to clearly and adequately disclose early termination procedures to consumers. The court found that Kakao failed to adequately inform users about the possibility of early termination, causing ordinary consumers exercis - ing reasonable care to mistakenly believe that no termination method existed other than expiration of the subscription period, thus hindering consumers’ choice of early termination. The court further held that liability under the E-Commerce Act can be established regardless of whether there was intent or purpose to obstruct early termination. This ruling is expected to significantly influence future KFTC enforcement proceedings concerning early termination obstruction allegations against OTT plat - forms and online shopping membership programmes. Meta, Temu cases The KFTC imposed a remedy and a fine against Meta, finding that while providing its Facebook and Instagram social network services, Meta failed to adequately guide businesses engaging in online retail through SNS (“influencers”) to comply with obligations under the E-Commerce Act, failed to establish mecha - nisms enabling consumers to seek assistance with remedies from dispute resolution, and failed to clearly specify such obligations in the terms of service. The KFTC also sanctioned Temu, an online platform for overseas direct purchases, imposing a remedy and a fine for violating the Act on Fair Labeling and Advertising by running advertisements falsely sug - gesting that coupons were available only if consumers installed the app within a limited time, or conducting
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