Will the Outdated Retail Law Be Revised? KFTC Signals Overhaul of T-Commerce and E-Commerce Regulations

Addressing Structural Power Abuse in Online Platforms

Large-Scale Retail Business Act Still Focused on Offline Markets

The Korea Fair Trade Commission (KFTC) has simultaneously set its sights on the T-commerce and e-commerce sectors. This move appears to stem from its assessment that it can no longer overlook the unfair business practices that have accumulated in the rapidly growing online retail market. It is interpreted as a signal to raise the level of regulation in line with the expanding influence of online platforms.

According to industry sources on April 8, the KFTC dispatched inspectors to the headquarters of Shinsegae Live Shopping and Kurly from April 6 to April 8 to conduct on-site investigations. Both companies declined to comment on the matter.

Shinsegae Live Shopping CI. Shinsegae Live Shopping

The main issue the KFTC is focusing on is the "dual status" of platforms. Platforms act as intermediaries connecting partner merchants, while simultaneously operating as direct sellers of goods. By running their own private brand (PB) products or engaging in direct purchasing, they find themselves in competition with the very partner merchants on their platforms. In this process, "self-preferencing"—in which a platform prioritizes its own products in search results or recommendation spaces—has become a key point of contention. Industry insiders point out that such practices can affect the sales of partner merchants, but current legal frameworks make explicit regulation difficult.

A clear gap between the market and the regulatory system is also evident. While the domestic retail industry has already shifted from an offline focus to mobile platform-centered operations, regulations remain designed around offline transactions, such as the Act on Fairness in Large Retail Business. As a result, there are limits to detecting new types of unfair trade practices between platforms and partner merchants.

T-commerce is considered structurally even more vulnerable. This is because TV channel programming rights are concentrated with platform operators, enabling them to effectively determine key conditions such as broadcast time slots, number of airings, and commission rates. There are concerns within the industry that these decisions are often made without clear contractual agreements, which could lead to "invisible abuses of power." E-commerce platforms have also faced ongoing criticism over issues such as transferring promotional and advertising costs to partners, delayed settlements, unilateral contract changes, and adjustments to exposure algorithms.

Kurly CI. Kurly

Until now, the KFTC has responded mainly to individual cases, but has been criticized for being unable to keep pace with the rapidly evolving market. Recently, however, there has been a shift toward overhauling the broader regulatory framework, including discussions on enacting the "Online Platform Fairness Act," expanding the scope of the Act on Fairness in Large Retail Business, and revising the Electronic Commerce Act.

Some view this latest investigation—targeted at specific companies—as a "pinpoint probe" that goes beyond a simple inspection. This aligns with the recent trend of the KFTC expanding investigations based on reports and complaints aimed at particular issues. In fact, Kurly received a corrective order from the KFTC in 2024 for practices such as imposing promotional costs on suppliers.

Industry insiders believe that this investigation will not be a one-off event. In the short term, it is expected to prompt companies to strengthen their internal transaction structure reviews and risk management. In the longer term, there is a strong possibility that this will lead to discussions on regulating the overall platform operation model, including algorithm transparency, commission structures, and settlement cycles.

An official in the distribution industry stated, "Until now, online retail has been subject to relatively lax regulation because it was considered an 'innovative industry.' However, as the market has grown in size, we are now entering a phase where rules similar to those for traditional retail are being applied." Another source added, "Rather than ending with investigations of specific companies, it is highly likely that this will lead to the establishment of industry-wide guidelines or legislative discussions. For platform operators, this is a time to re-examine their entire business model."

This content was produced with the assistance of AI translation services.