Kim & Chang secured a complete victory for a leading Korean mobility platform company (the “Plaintiff”) in a lawsuit against the Korea Fair Trade Commission (the “KFTC”). The lawsuit sought to revoke the KFTC’s corrective order and a fine of approximately KRW 27.1 billion. The KFTC had argued that the Plaintiff abused its market dominance by using an algorithm to unfairly favor its member taxis. The Seoul High Court accepted our arguments and overturned the KFTC’s dispositions entirely.

The key issue in this case was whether the Plaintiff’s taxi allocation algorithm constituted (i) abuse of market dominance (as a type of discriminatory treatment), and (ii) an unfair trade practice (as a type of discriminatory treatment and imposition of disadvantages). The KFTC claimed that the algorithm was designed to give preferential treatment to the Plaintiff’s member taxis. The KFTC argued that this practice unfairly reduced business opportunities and revenue for non-member taxis, restricted competition and strengthened the Plaintiff’s market dominance.

We successfully countered the KFTC’s claims on several fronts.

First, we argued that the terms and conditions between member taxis and non-member taxis were fundamentally different, meaning they could not be compared for discriminatory treatment. The court agreed, ruling that the two were not equal and therefore there was no discrimination.

Second, we emphasized the KFTC’s failure to clearly specify or substantiate the disadvantages suffered by non-member taxis, a point the court also accepted.

Finally, our firm challenged the KFTC’s data on reduced business opportunities and revenues of non-member taxis, pointing out that it was unreliable because it involved variables irrelevant to the Plaintiff’s conduct. The court agreed and concluded that the KFTC failed to provide specific and objective evidence needed to prove anti-competitiveness effects.

This case sets a crucial precedent for platform companies facing regulatory challenges to their business models and underlying algorithms. Our victory hinged on a meticulous defense that dismantled the regulator’s claims.

We provided a compelling explanation for the algorithm’s purpose and actual effect, convincing the court that it was not a tool for discrimination. We meticulously analyzed the legal principle of discriminatory treatment and successfully argued that the use of the algorithm did not illegally discriminate the Plaintiff’s non-member taxis from member taxis. We also used empirical data to sever the causal link between the algorithm and alleged anti-competitive effects. We believe our data-driven approach and rigorous analysis on the legal principle of discriminatory treatment was key to obtaining a favorable decision.

This ruling is highly significant because it recognizes the dynamics of the platform market and protects the innovative, algorithm-based business models that drive new markets. The appellate court affirmed that the use of new technology by platform companies would be subject to reasonable business judgment review, thereby establishing a legal foundation that allows platform companies to operate their businesses with greater clarity.