NCCP, first surrogate driving industry meeting on the 26th
Conflicts arose with launching apps and entering phone call market
Formation of the Coordination Council… Consultation for up to 1 year Expe
After entering surrogate driving market, Kakao Mobility and Tmap Mobility faced difficulties that such business is suitable for small and medium-sized enterprises.
The two companies’ surrogate driving services have no legal dispute in terms of service provision unlike “Tada basic,” which VCNC has suspended its business, but faces criticism that it accelerates the exit of small businesses from the market. A conflict between surrogate driving operator (call center) and the two companies grew because the two companies launched surrogate driving applications (apps) and entered a phone call market. In the worst case, companies may even be forced to leave the market.
According to a source from the industry on the 19th, the National Commission for Corporate Partnership (NCCP) will form a coordination council that consists of Korea Service Driver Society, Kakao Mobility, and Tmap Mobility, and hold its first meeting on the 26th. VCNC was not part of the council when it decided to withdraw the 'Tada surrogate driving' business.
Prior to this, the assembly of surrogate driving companies that operates through call centers submitted an application to the NCCP at the end of may in order to designate surrogate driving business to be suitable for small and medium-sized enterprises. This action was taken because the existing surrogate driving operators felt an imminent threat as Kakao Mobility and Tmap Mobility directly and indirectly entered the phone call market and launched app-based surrogate driving call operators.
Last year, Kakao Mobility bought '1577 surrogate operation', the number one surrogate driving operator after buying CMNP, the second-largest surrogate driving operator. Kakao Mobility re-established the company as K-Drive.
Tmap Mobility, a latecomer in the market, made a strategic investment in 'Good Services', a company specializing in corporate representation, and increased its market influence by collaborating with 'Butler', which operates a part-time driver service, and 'Call Market,' a broker business.
Although the assembly of existing surrogate driving companies plans to request large companies to withdraw from the market through the coordination council, it is unlikely that a complete withdrawal of the large companies will be possible.
Kakao Mobility has been in the market since 2016, meaning the business has been around for five years, and surrogate operation is one of the core services of Kakao Mobility and Tmap Mobility's 'Mobility-as-a-Service (MaaS) platform’ business. Even if the two companies consider a win-win situation with small and medium-sized enterprises, it is not easy to decide to completely withdraw from the market.
Experts suspect that a compromise may be reached as a realistic option where the two companies may withdraw from the phone call market. There is going to be a considerable amount of time required for implementation even if there is an agreement. This is because it is not easy to sell the acquired company or the stake in the company that the two companies have invested in. The problem is that the existing small and medium-sized agency operators do not have enough funds to purchase them.
The NCCP conducts mediation consultations for up to one year from the date of application for designating a suitable industry. The deadline is at the end of May next year, but since the process has to undergo the NCCP’s review, the assembly of companies needs to draw up an adjustment agreement by the 10th month since the application.
The NCCP plans to collect opinions from industry officials, including deputy engineers, and conduct a fact-finding investigation. In addition, if the positions of both parties do not come to an agreement, academic experts will be invited to the coordination council for mediation and take account for their opinions.
An official from the NCCP said, "It is true that a coordination council is formed, but the schedule has not been confirmed.”
On the other hand, if the market is designated as a suitable business for small and medium-sized enterprises, consensus recommendations are issued, such as prohibition of entry of new conglomerates and restraint of business expansion or withdrawal of existing businesses. Although the recommendation is not legally binding, no company has so far failed to comply.
If no consensus recommendation is reached, an application for business adjustment is made to the Ministry of SMEs and Startups. Business adjustment is also just a recommendation, but if it is not implemented, it may issue an enforcement order. Violation is punishable by imprisonment for not more than two years or a fine not exceeding 150 million won.
By Staff Reporter Jinhyung Park (jin@etnews.com)