SOUTH KOREA Law and Practice Contributed by: Hyun Ho Eun, Jung-Chull Lee and Dukjoong Na, Kim & Chang
In addition, the GIPA has specific restrictions on the game advertisement. The GIPA prohibits advertise- ments and promotions: • where contents are actually different from the con- tents reviewed at the time when ratings were given to the game products; • that indicate a different rating from the actual rat- ing; • that contain game content information that is differ- ent from the game content information required to be disclosed to users (which is determined at the time when ratings are given to the game products); and • that encourage speculative conduct or act by, for example, offering free gifts. Advertising related to illegal gambling is not permit- ted. First, advertising, marketing and customer solici- tation activities conducted in South Korea with regard to illegal gambling may constitute “aiding and abetting of illegal gambling by individuals”, a criminal offence under the Criminal Code. Furthermore, under the Act on Promotion of Information and Communications Network Utilisation and Information Protection, no one may circulate any information containing content that amounts to “speculative activities” prohibited by laws and regulations, and such information may be subject to a takedown order. However, the aforementioned restrictions do not apply to lawful gambling such as licensed casino operations. 9.5 Sanctions/Penalties For violations of the E-Commerce Act, depending on the type of violation, the KFTC may impose not only administrative fines but also other sanctions such as corrective measures (eg, suspension orders or public announcement orders) and penalty surcharges. The KFTC has been actively enforcing the E-Commerce Act in relation to the loot boxes of major game com- panies. In 2018, the KFTC imposed certain corrective orders, public announcement orders and penalty sur- charges on a couple of the major South Korean game companies for violating the E-Commerce Act relating to their conduct of selling loot boxes. In January 2024, the KFTC imposed the largest-ever penalty surcharge of KRW11.6 billion (approximately, USD8 million) on
one of the major South Korean game companies in relation to deceptive conduct relating to selling the loot boxes in their games to users. Under the GIPA, the MCST may order the removal of the advertisement or promotional materials as a cor- rective measure. However, in practice, it is not com- mon for companies to receive a corrective order – the MCST typically issues a recommendation for correc- tion before imposing an actual corrective order. Gam- ing business operators can be subject to an admin- istrative fine not exceeding KRW10 million for such charges. 10. Acquisitions and Changes of Control 10.1 Disclosure Requirements There are no specific disclosure requirements for acquisitions or changes of control of gaming and gambling companies; instead, general rules on merger control in South Korea apply. A company with assets or revenues of KRW300 billion or more, if the assets or revenues of the target company are KRW30 billion or more, is required to file a business combination report to the KFTC. Listed companies are obligated to disclose acquisitions and change of control. In certain industries, there is a reporting obliga- tion when a business is transferred or undergoes a change in control, whether directly or indirectly, such as through mergers and acquisitions. For example, when a game production (distribution) business is transferred or undergoes a change in control, the transaction must be reported to the relevant local government in accordance with the GIPA. For casino businesses, there is a reporting obligation pursuant to the Tourism Promotion Act, while value-added tel- ecommunications businesses have a reporting obli- gation under the Telecommunications Business Act upon such transfer or change in control. 10.2 Change of Corporate Control Triggers There are no separate change of corporate control triggers for gaming and gambling companies. As men- tioned in 10.1 Disclosure Requirements , general rules
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