In May 2020, the Seoul High Court ruled in favor of Booking.com in its appeal seeking a reversal of the Korea Fair Trade Commission(the “KFTC”)’s decision to impose corrective orders against Booking.com to amend its refund policy.
Since 2016, the KFTC had reviewed the local terms of service of online travel agencies (“OTAs”), including Booking.com, and imposed sanctions against several OTAs in the form of corrective orders for offering non-refundable products (e.g., rooms) or having a no-refund policy that unfairly denied refunds in violation of the Standardized Contract Regulations Act (the “SCRA”). Kim & Chang represented Booking.com in responding to the KFTC’s investigation and later continued to defend Booking.com in its appeal to the Seoul High Court, which ultimately reversed the KFTC’s corrective order against the OTA. Since then, the KFTC appealed the Seoul High Court decision to the Supreme Court, which issued a ruling in favor of Booking.com on September 21, 2023.
In imposing the corrective orders, the KFTC had explained that the non-refundable products offered through Booking.com’s online platform and related no-refund clause were part of Booking.com’s terms of service, and argued that the terms of service were in violation of the SCRA as they imposed an excessive burden on consumers with the duty to compensate for damages. In defense of Booking.com vis-à-vis the KFTC, we conducted an in-depth economic analysis demonstrating the consumer welfare-enhancing effects of the non-refundable products offered on Booking.com’s platform, enabling it to rebut the KFTC’s key allegations.
During Booking.com’s appeal of the KFTC’s corrective order, we conducted further in-depth analysis of Booking.com’s business model, work process and related terms of service to show that (i) the terms and conditions relating to refunds are not part of Booking.com’s terms and conditions, (ii) even if they were part of Booking.com’s terms and conditions, non-refundable products can further the interests of a large number of consumers, (iii) non-refundable products can act as another source of competitive pressure on the relevant market that helps foster competition and invigorate the economy, and consequently, (iv) a uniform prohibition of all non-refundable products can negatively affect consumer welfare. The Seoul High Court accepted all of our arguments and concluded that there was not enough evidence to argue that offering the non-refundable products was unfair or unreasonable toward Booking.com’s users.
Based on our extensive experience in handling cases involving platform operators, we worked closely with Booking.com to conduct fact-finding and analysis during the KFTC’s investigation and successfully persuaded the Seoul High Court to rule in favor of Booking.com. In addition, the combined expertise of our firm’s lawyers, accountants and economists allowed us to effectively explain the current platform market situation and the economic functions and benefits of non-refundable items, and sufficiently demonstrate that non-refundable items could benefit consumers and the society as a whole.
