KFTC Decision on Naver

The Korea Fair Trade Commission (the “KFTC”) issued a corrective order and imposed an administrative fine against Naver, a popular Korean online platform, for abuse of market-dominant position and unfair trade practice. The KFTC accused Naver of unfair self-preferencing, finding that Naver had (i) altered its search algorithm for its shopping and video search services so that its preferred products and services are featured first, and (ii) prevented partnering real estate information content providers from entering into agreements with Naver’s competitors. Naver has publicly announced its disagreement with the KFTC’s findings and that it will appeal the KFTC’s decision to the courts.

Below is a summary of the KFTC’s findings and sanctions.

Area	Findings	Sanctions
Shopping	Naver altered its search algorithm so that products from vendors on its own “Open Market” platform are shown before other products in the search results. The conduct included: Downward adjustment of competing open market’s rankings; Securing or extending the exposure of its own open market; Giving additional sales points to its own open market products; Applying the “same-mall logic” (adjusting down the search rankings of products if multiple consecutively shown products are from the same mall, with the purpose of increasing diversity of search results) on other malls, but not on its own; and Relaxing restriction cut-offs on its own open market exposure.	Corrective order Administrative fine of approx. KRW 26.5 billion
Video	Naver altered search results by giving additional points to its own videos only or not notifying competitors of changes to its search algorithm. The conduct included: Providing additional points to only the videos published on the Naver TV Theme Gallery; and Failure to inform other video providers of the importance of “keywords” in the revised algorithm.	Corrective order Administrative fine of approx. KRW 200 million
Real Estate Information	Naver added provisions in its partnership contracts to preventing content providers from sharing real estate information with third parties. In doing so, Naver interfered with Kakao’s attempt to enter the real estate brokerage market.	Corrective order Administrative fine of approx. KRW 1 billion

The KFTC emphasized the decision as the first case where it sanctioned an online platform business for unfair self-preferencing. The Korean regulator heralded the case as helping to promote fair competition in the online platform industry and ensure consumer options.

We anticipate the KFTC’s scrutiny of online platform businesses will intensify, particularly if its proposed legislation—the Fairness in Online Platform Intermediary Transactions Act—is enacted.

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