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Review of Recent Antitrust Trends on Digital Platforms in Asia

August 27, 2021

By Szu-Yi (Julie) Lee

This blog post was submitted as a contribution to the Tabula project, an international and comparative research collaboration carried out over the summer of 2021.

 

With the growth of regional business, different jurisdictions in Asia have risen to tackle antitrust issues. An interesting focal point is the alignment among these jurisdictions on abuse of dominance in the digital economy and the further strengthening of regulation over mergers and acquisitions. Among other things, what should be highlighted here is the trend to regulate digital platforms, since the trend has emerged along with the industry while this area of law is making great strides.

In Indonesia, Grab Indonesia, a ride-share platform, together with a leasing company it has a partnership with, were fined over $3 million in 2020 on the grounds of preferential terms with anti-competitive and discriminatory effects. Even before the Grab Indonesia fine, the fintech industry had been identified by the KPPU, the organization that enforces antitrust law in Indonesia, to be the focus of upcoming investigations.

Meanwhile, in nearby Singapore, CCCS, the local competition regulator, has, in a study on digital platforms, identified the insufficiency of definition of “market,” specifically with regard to multi-sided platforms or assessment of market power in cases concerning digital platforms. Such a statement does not seem surprising, as standard indicators of market power have not been conclusive in relation to digital platforms.

In Korea, on the other hand, there has been not only more aggressive enforcement, but also specialized legislation spearheaded by the local authority, the Korean Fair Trade Commission (KFTC). In response to the burgeoning information and communication technology (ICT) sectors, the Information and Communications Technology Task Force was created by the KFTC in 2019. Later, trying its first case on Naver, Korea’s largest digital communication platform, it gave Naver an administrative penalty for unfair trade practice and abuse of dominance. Furthermore, in 2020 the KFTC proposed the Fair Intermediate Transactions on Online Platform Act, aiming to improve transparency in contracts and prevent abuses of adverse bargaining positions.

In the People’s Republic of China, legislation has been proposed that is consistent with the regulatory tide in the other Asian jurisdictions, tightening up scrutiny on the technology sector. Using the Anti-Monopoly Law, the State Administration for Market Regulation (SAMR) has launched several investigations into tech giants such as Alibaba for exclusionary practices. As could be further seen in the Guidelines for the Platform Economy Industries, published by the PCR’s Anti-Monopoly Commission in February 2021, it is obvious that the local authority is now working on enforcement policies to ensure fair market competition in this sector. The Guidelines attempted to cover the four aspects of the Anti-Monopoly Law applied on digital platforms. It first laid out prohibitions on monopoly agreements in light of technical methods, such as platform rules, algorithms, and data, and included “hub-and-spoke” arrangements among those prohibitions. In addition, the Guidelines suggested that exclusivity arrangements or the reliance on big data and algorithms to discriminate among trading counterparties would be considered abusive conduct. Finally, with respect to mergers and acquisitions in the digital sector, it states that if Variable Interest Entities are engaged in the merger, the transaction is subject to merger control review.

Given the amount of activity already under way concerning antitrust trends, more enforcement should be expected to take place in the near future to curb anti-competition acts. Nonetheless, as authorities re-draw the boundaries of the market with digital platforms now included, we can expect that further innovative approaches to digital platforms will need to continue to be carved out of the definition and will need to find their niches in the world of anti-competition in the future.