OECD kpcdb

1. Scope

Article 15 of the Fair Trade Act prohibits concerted action. The term "concerted action" as used in this Act means that competing enterprises at the same production and/or marketing stage, by means of contract, agreement or any other form of mutual understanding, jointly determine the price, quantity, technology, products, facilities, trading counterparts, or trading territory with respect to goods or services, or any other behaviour that restricts each other's business activities, resulting in an impact on the market function with respect to production, trade in goods or supply and demand of services.

 

Article 19 prohibits restrictions on resale prices of the goods and services supplied to its trading counterpart for resale to a third party or to such third party for making further resale. However, those with justifiable reasons are not subject to this limitation.

Aside from the stipulations of RPM, no enterprise shall engage in any of the following acts that is likely to restrain competition pursuant to Article 20:

 

a)  causing another enterprise to discontinue supply, purchase or other business transactions with a particular enterprise for the purpose of injuring such particular enterprise;

b)  treating another enterprise discriminatively without justification;

c)  preventing competitors from participating or engaging in competition by inducement with low price, or other improper means;

d)  causing another enterprise to refrain from competing on price, or to take part in a merger, concerted action, or vertical restriction by coercion, inducement with interest, or other improper means;

e)  imposing improper restrictions on its trading counterparts' business activity as part of the requirements for trade engagement.

2. Assessment

Under Article 15, enterprises engaged in concerted action may apply for an approval to the FTC. After receiving an application for approval of concerted action, the FTC has to make a decision within three months whether to grant the approval. The approval may set out conditions to be met by the applicants.

 

Under Article 16, the approval may be granted for up to 5 years. Within three to six months prior to the expiration of such period enterprises involved may apply for an extension up to 5 years.

A concerted action may be approved if it is beneficial to the economy as a whole and in the public interest. In order to benefit from the exclusion, the concerted action should meet one of the following conditions (Article 15):

 

a)  unify the specifications or models of products or services to reduce costs, improve quality or increase efficiency;

b)  joint R&D on products, services, or market to upgrade technology, improve quality, reduce costs, or increase efficiency;

c)  rationalisation of operations;

d)  agreements to secure or promote exports in foreign markets;

e)  joint acts in regards to the importation for the purpose of strengthening trade;

f)   joint acts limiting the output or prices to meet the demand orderly where the enterprises in the same industry have difficulty in maintaining their business or face overproduction because of economic downturn;

g)  joint acts to improve operational efficiency or strengthen the competitiveness of SMEs; or

h)  joint acts required to improve industrial development, technological innovation, or operational efficiency.

3. Remedies and sanctions

See Section I.4 above on Remedies and Sanctions.

The FTC has made a total of 280 decisions relating to anti-competitive agreements between 1992 and 2016. Out of 280 cases, 208 cases were related to concerted action and 72 cases to resale price maintenance.

4. Leniency

Under Article 35, the FTC may grant exemption from or reduction of administrative fines to enterprises that reveal and submit evidence of their involvement in prohibited concerted action.

According to Article 7 of the Regulations on Immunity and Reduction of Fines in Illegal Concerted Action Cases, full immunity on fine is granted to the first enterprise to come forward with evidence of prohibited concerted action before the investigation or prior to the knowledge by the FTC of the infringement. If no enterprise has come forward before the investigation, full immunity may be granted to the first enterprise to come forward during the investigation.

 

Reduction in fine may be granted to subsequent applicants as follows: a) 30% to 50% for first applicant; b) 20% to 30% for second applicant; c) 10% to 20% for third applicant; d) up to 10% of the fine for fourth applicant

 

So far there have been 3 successful cases of leniency applications

 

 

* This information is based on Competition Law in Asia-Pacific: A Guide to Selected Jurisdictions (2018).