FTC gets settlement proposal from portals

The Fair Trade Commission (FTC) said yesterday it will consider restitution and corrective measures proposed by major domestic portal sites Naver and Daum to settle allegations of unfair business practices.

The nation’s top Internet portal companies Naver, Daum and SK Communications, which faced fines of tens of billions of won last month for unfair business practices, have asked the FTC to accept a leniency and consent decree.

Naver and Daum were accused of disguising advertisements as search query results.

The leniency and consent decree includes autonomous restitution, remedies and corrective measures by the accused business operators.

The FTC said it will meet tomorrow to consider the portal companies’ request.

The agency finalized an audit last month and sent out reports, raising alarm among the portal companies that it would determine the level of punishment by early December.

The decree often is used in the United States and Europe because it brings substantial damage relief through voluntary corrective measures and doesn’t undermine competitiveness of the businesses.

If the FTC decides to initiate the decree, it would be the first time it has been used in Korea since its introduction in November 2011.

“If it is accepted, besides their abuse of market-dominant position, violation of the Display Advertisement Act will not be applied to the consent decree and thus be punished separately,” said an FTC official.

“It is widely known that Naver and Daum have been using unfair practices, taking advantage of their superior positions. If the FTC does not impose strong sanctions against these large portal companies, it will be difficult to avoid criticism from victims of Naver and Daum,” said a spokesman for the People’s Solidarity for Participatory Democracy.

Meanwhile, SK Communications was exempt from the subjects of the consent decree as its market share is too small to be considered dominant.

If the FTC accepts the leniency and consent decree tomorrow, the issue of the two portals’ violation of the fair trade law will immediately be terminated.

Instead, the two portal companies will undergo additional procedures to create provisional consents within 30 days, since the initiation of the consent decree would be based on the voluntary corrective measures they proposed.

Within two months of the initiation, the FTC will receive the final consent, and within 14 days of confirmation of final consent, it would be enacted.

During the additional process, which takes about three months, the FTC will accept feedbacks from stakeholders such as civic groups and relevant ministries, including the prosecution.

BY KIM JUNG-YOON [kjy@joongang.co.kr]