, to drop lowest-rate terms on Korea's regulatory demand
06/03/2020|3:50:35 PM|BusinessKorea

Global online travel agencies (OTAs), including Booking.Com, Agoda, Expedia and Trip.Com, have submitted to the Korea Fair Trade Commission (FTC) corrective measures for the abuse of their superior position in the market against Korean lodging companies.

These companies were investigated by the FTC for demanding lowest price guarantees from Korean lodging companies. In the corrective measures presented to the FTC, they offered to delete the "lowest guarantee" clauses in their contracts with lodging companies.

When a hotel signs a lowest price guarantee contract with an OTA, it is required not to post prices lower than the ones offered to the OTA on its website or not to offer lower prices to other OTAs.

The level of the FTC’s sanctions against the OTAs is expected to be somewhat lowered as they have submitted corrective measures before the FTC requests the prosecution to indict them.

Behind the FTC’s investigation of the OTAs lies FTC Chairman Cho Sung-wook's interest in monitoring “untact” and non-face-to-face industries. Cho launched a task force dedicated to the ICT sector in November 2019. It consists of three divisions — online platforms, mobile, and intellectual property rights. Cho is determined to level the playing field in digital industries.

The FTC has launched such an extensive oversight of online platforms because it believes that the current fair trade law alone has limitations in regulating various unfair practices as related markets are growing rapidly. Global OTAs have emerged as the tourism and lodging industries were reorganized based on web and mobile platforms. They quickly dominated the market based on their strong capital power and data. The FTC plans to determine the level of punishments based on the OTA companies’ corrective measures.

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