Research Report
A Study on the Systematic Countermeasure to Resolving Regulatory Conflicts in New Industries
Ⅰ. Background and Purpose
▶ Background and purpose of research
○ An important key for facilitating technology innovation such as start-up companies entering a new market and implementing new technologies is resolving the conflicts caused by regulations.
○ Even the ‘regulatory sandbox policy,’ which gives special cases to support new technologies and new services to enter the market, has an aspect that is difficult to allow areas with severe confrontation between stakeholders.
○ In order to overcome the delay in innovation caused by resistance from stakeholders, it is very important to bring a ‘social consensus’ for mutual benefit between new entrants and existing industry workers.
○ If an institutional framework for systematically managing conflicts occurring in new industries cannot be established preemptively, whenever conflicts occur there will be one-off solution which can incur social costs and difficulty of accepting new innovation.
▶ Scope and method of research
○ Part 2 of this research defines the concept and meaning of regulatory conflict in new industries and reviews the importance of coordinating social consensus.
○ Part 3 examines the conflict between existing and new industries, focusing on the case of the sharing economy, and analyzes the current status of the government-run social consensus system such as Hackathon of the The Presidential Committee on the 4th industrial revolution and the Ministry of Economy and Finance's ‘one step forward’ model.
○ Part 4 derives the problems of the current system and desirable legislative directions through expert Delphi method surveys of participants in hackathon and ‘One step forward’ model.
○ Part 5 is the conclusion of this study and presents legislative suggestions.
Ⅱ. Marjor Contents
▶ Regulatory conflict of new industries and the importance of consensus and coordination
○ As can be seen from policy cases such as collision regulation over shared services such as accommodation sharing and vehicle sharing, or conflicts of interest related to the introduction of telemedicine, it is necessary to systematize conflict resolution mechanisms in order for innovation to be successful.
○ It is necessary to design legal procedures and systems that support social consensus and conflict management and mediation so that conflicts can be recognized objectively and solutions can be sought.
○ Under the current law, there are no laws related to conflict management, also「Regulations on the Prevention and Resolution of Conflicts in Public Institutions」 just deal with public institution related regulations, in this case there are limitations in securing legal effect on the continuous operation of the agreement system.
○ The government operates hakathon(Presidential Committee on the 4th industrial revolution) and ‘one step forward’ model(Ministry of Economy and Finance) as a system for social consensus in new industries without legal basis, although the Conflict Mediation Committee is legislated under the 「Industrial Convergence Promotion Act」, there are no actual cases in which the committee has been formed and operated.
▶ Critical review of the current system seen through cases of conflict in the sharing economy
○ New types of shared vehicle services continue to emerge amid the situation where certain companies could not exceptionally allow entry into the market under a social atmosphere where the acceptance posture of new industries is not completed.
○ The government tried nothing to form a consultative body when Uber service (2013) has created conflicts. However, government tried to form a consultative body when Carpool service(2016) has created conflicts. However, confusion regarding the method and content has occurred.
○ In this process, the court's judgement concluded that it was legal, but by institutionalizing new transportation platform providers and by implementing legislation to share market stabilization contributions to them, all major vehicle-sharing services such as Uber X, Poolus, and Tada Basic stopped their business.
○ The level of decision-making results in resolving regulatory conflicts in new industries is greatly influenced by the existence of a consultative body, who participates, and how the consultation was conducted.
○ Although the government tried actively to resolve the conflicts, the Great Social Compromise Mechanism was a temporary meeting body prepared by the congress and also led by the ruling party and the government therefore systematic procedures and meeting minutes were not transparently disclosed.
○ This suggests that it is desirable to establish a permanent organization which deal with regulatory conflict rather than operating it in a form of non-permanent organization
▶ Hackathon of the The Presidential Committee on the 4th industrial revolution
○ In promoting regulatory reform, the government introduces a hackathon which is one of the ‘process of debate finding the right answer’ in areas where there are social pros and cons or need to be socially publicized.
○ Even hakathon is operated based on the Article 2, No. 8 of Operational Regulation(Presidential decree) of Presidential Committee on the 4th industrial revolution it still has limitations due to absence of legal basis.
○ In order to maximize the advantages of the hackathon and enhance its practical effect, it is necessary to establish a legal basis for establishing normative grounds such as the mandatory implementation of the agreement and status as a legal body.
▶‘One step forward’model of Ministry of Economy and Finance
○ In June 2020, the Ministry of Economy and Finance introduced a ‘one step forward’ model at joint Innovative growth congress as a grand compromise mechanism to resolve conflicts between stakeholders, the biggest constraint on regulatory improvement, with the aim of creating a friendly regulatory environment following the emergence of new industries.
○ ‘One step forward’ model is also based indirectly on "discovering tasks for innovative growth-related regulatory innovation, consulting with stakeholders, and establishing improvement measures(Article 2 (2) 5)," among the functions stipulated by the 「Regulations on the Establishment and Operation of the Innovation Growth Promotion Team」.
○ Due to the confrontation between stakeholders, the outcome of stakeholder consultations may not be linked to the policy decision-making process, and there is a limitation that it is temporary even if an agreement is reached.
▶ Conflict Mediation Committees of Industrial Convergence Promotion Act
○ Although the Conflict Mediation Committee is legislated under the 「Industrial Convergence Promotion Act」, there are no actual cases in which the committee has been formed and operated.
▶ Investigation and analysis of measures to improve the current system and legislative directions.
○ In this study, 45 experts with experience in participating in the government-run social consensus system were surveyed under delphi method three times through an online platform from May 10 to August 6, 2021.
[Table 4-3] Step-by-step process of delphi method
○ In the final third Delphi method survey, as a comprehensive conclusion of this survey, considerations and desirable legislative directions for the legislation of the social consensus system were derived through the evaluation of the importance of each item, and the key results are as follows.
[Table 4-30] Result of analysis on the importance of legislative purpose and purpose clauses
[Table 4-31] Result of analysis on the importance of basic principles and obligations for system operation
[Table 4-32] Result of analysis on the importance related to the role of ministry which is in charge of managing the overall system
[Table 4-33] Analysis of importance related to the scope and method of setting the agenda
[Table 4-34] Prioritization analysis result regarding consensus decision method
[Table 4-36] Analysis of the importance of the overall operation of the social consensus system
▶ The need to legislate a social consensus system specialized in new industries
▷ [Legislative demand and Necessity]
① Overcoming cases of failed conflict resolution in new industries and expanding the role of government
○ Unlike conflicts in other public sectors, conflicts in new industries are mostly caused by absence of regulation, so the function and role of the government is just as important.
○ The active role of the government as regulatory authority in the adoption of new industries needs to be emphasized
② Establishing an explicit legal basis for the department in charge and the consensus system
○ The hackathon model of the Presidential Committee on the 4th industrial revolution dealing with new industrial conflicts and the ‘one step forward’ model of the Ministry of Economy and Finance are not legally based.
○ Due to this lack of legal basis, problems such as opacity and unfairness in the current social consensus system are criticized, so it is necessary to secure an explicit legal basis.
③ Securing procedural legitimacy and fairness of the social consensus body
○ Without detailed regulations on the operation of the social consensus body, it is difficult to guarantee the legitimacy and fairness of each procedure, such as agenda setting in the consultation process, panel composition method, and consensus decision method.
▷ [Legislative proposal]
① Suggestion of 「(Tentatively entitled)Act on the Operation and Support of the Social Consensus System(draft)」
○ The method of regulating through the revision of existing laws has limitation which is difficult to contain the grounds for establishing a permanent body with an empowerment of agreement and coordination and the provision of a specialized government organization in the new industry field.
○ A new enactment of ‘(Tentatively entitled)Act on the Operation and Support of the Social Consensus System(draft) is the most effective way to prepare substantive laws.
② Establishment of a permanent legal body and securing the authority of the department in charge
○ Propose a plan to establish the (Tentatively entitled) New Industry Regulatory Conflict Mediation Committee as a permanent body when promoting new legislation
○ Since the new industry sector is emerging in a very wide range of areas, a separate independent committee is needed to be in charge of regulatory conflict management and mediation functions in the new industry as it must have a continuous response system and operate an internal expertised consensus system.
○ It is necessary not only to prepare legal grounds for ‘New Industry Regulatory Conflict Mediation Committee’, but also to prepare grounds for securing practical authority, such as recommendation for implementation to other ministries and sharing information on the progress of implementation.
③ Legislative Design Plan for Procedural Contents and Means, etc.
○ Specific legislative designs include legislative purposes, government responsibilities basic principles of conflict mediation and management, agenda setting scope and selection method, scope and selection method of stakeholders, and consensus decision method.
Ⅲ. Expected Effects
○ Existing prior studies generally suggest various conflict management strategies to solve the case analysis through the typification of social conflicts.
○ However, in this regard there are insufficient legal studies that specifically verified the legislative demand and necessity to regulate in units of law.
○ Currently the discussion to find legislative alternatives is limited to the principled and justifiable level, through this study an appropriate response milestone should be derived for the regulatory collision and conflicts occurring in the new industry and also contribute to the preparation of legislative measures of a post-conflict resolution mechanism.