Study on the Illegality of Self-preferencing practices by Online platforms

In December 2023, the Fair Trade Commission announced that it would introduce the tentatively named ‘Platform Fair Competition Promotion Act’ to pre-designate ‘dominant online platforms’ and prohibit abuse of their market dominant position. The fundamental question is whether online platforms’ self-preferencing can be considered subject to regulation under competition law, and what are the standards for judging its illegality. These controversies include what is the basis for recognition of market dominant position in the online market under the current legal system and whether self-preferencing can be included as a regulatory type of abuse of market dominant position. The Monopoly Regulation and Fair Trade Act prohibits abusive practices of market dominant Position in the relevant market, resulting in the effect of restricting competition. But, it is not easy to determine whether a market dominant position exists or whether there is a competition restriction effect in online platform market. Despite this situation, the Fair Trade Commission is establishing legislative policies to preemptively determine dominant online platforms and prohibit their abusive practices. However, the limitations of the use of the SSNIP test in online platforms did not overcome in ‘the Naver shopping case’, and the theory of monopoly leveraging, which is intended to be applied to determine the effect of restricting competition, has virtually lost its value in the United States, and the related discussions in the EU are different from the judgment standards established in ‘the Posco case’ in Korea. Considering the characteristics of the online platform market, which has the possibility of infinite competition in a multi-sided market without regional restrictions due to technological development, and the efficiency enhancing effect that the various services provided by online platforms will bring, regulation of the online platforms must be cautious.