OECD kpcdb

1. Scope

 

Article 19 of the MRFTA regulates anticompetitive agreements under the name of “unfair collaborative acts.” Article 19 of the MRFTA prescribes that no business entity shall agree with other business entities by contract, agreement, resolution, or any other means, to jointly engage in activities which restrict competition.

 

Article 19 of the MRFTA provides a list of unfair collaborative acts including: price fixing, agreements on terms and conditions for transactions, restriction on production or delivery, market allocation, bid rigging, restriction on types and standards of goods or services, and joint management of major parts of business or the establishment of a company to that end.

2. Assessment

The Guidelines for Concerted Practice Review sets forth that for price fixing, agreements to fix output, market allocation, and bid rigging are presumed anti-competitive with no need to examine other factors.

 

The Guidelines for Concerted Practice Review also note that when the total market share of participating businesses is less than 20%, the effect of the unfair collaborative act is considered negligible regardless of the existence of anti-competitive effects.

Resale price maintenance is analysed under the rule of reason, taking into account the efficiency-enhancing effect.

 

For unfair collaborative acts not provided for in the guidelines, the KFTC takes into account whether the act concerned has an efficiency-enhancing effect. When the anti-competitive effect of the act concerned outweighs the efficiency generated, the act is deemed anti-competitive.

3. Remedies and sanctions

Article 21 of the MRFTA sets forth that when any collaborative act is performed in violation of Article 19 (1) (Prohibition of Unfair Collaborative Acts), the KFTC may order the business entity concerned to discontinue such act, to publish the fact that the relevant business entity is ordered to correct such collaborative act, or to take necessary corrective measures.

 

Article 22 sets forth that when any act is performed in violation of Article 19(1), the KFTC may impose a surcharge on the relevant business entity within the limits not exceeding the amount equivalent to 10 percent of the turnover determined by Presidential decree.

 

Article 66 (Penalty Provisions) (1) sets forth that any person who violates Article 19 (1) shall be punished by imprisonment for up to three years or by a fine not exceeding KRW 200 million.

 

From its establishment in 1981 to 31 December 2016, the KFTC imposed a total of 1,059 measures such as surcharge, corrective orders, amongst others, against anti-competitive agreements.

4. Leniency

Under Article 22-2 of the MRFTA, either total immunity from or reduction of remedies and penalty surcharges, and exemption of criminal prosecution can be obtained for entities that self-report on unfair collaborative acts and/or hand co‑operate in the investigation by means of providing evidence. Under Article 35-1 of the MRFTA Enforcement Decree, prior to the initiation of investigations, the first leniency applicant that voluntarily reports on unfair collaborative acts is exempt from surcharges and corrective measures, while the second leniency applicant can receive a 50% reduction in surcharge and a mitigation of corrective measures.

 

Provided that the KFTC does not have sufficient evidence to prove unfair collaborative acts after the initiation of investigations, business entities that co‑operate during the investigation can still receive immunity from surcharges or a mitigation of corrective measures. In all instances, to be eligible for leniency the applicant must sincerely co‑operate until the end of the investigation by disclosing relevant facts and submitting relevant documents and promptly terminated its part in the activity.

 

Upon receiving leniency applications, the KFTC issues an “Acknowledgement of Receipt” to the applicants, specifying the date, time and order of the application. The full committee of the KFTC decides whether to confirm or deny the application. When conditions are met, the applicant either receives benefits or faces a cancellation of applicant status.

 

Procedurally, first, the committee decides the amount of penalty surcharges against the applicant of the original case. Then, through the deliberation and resolution procedure on the separate leniency case, penalty surcharges of the relevant business entity shall be cancelled partially or entirely should all conditions set out in Article 35 of the MRFTA Enforcement decree be complied with.

 

Amnesty plus: If a company is under the KFTC’s investigation into cartel A and discloses cartel B as a first-in leniency applicant, the company may receive amnesty in cartel B as the first-in applicant, and also get a reduction or exemption of surcharges for cartel A. The reduction rate that will be applied to cartel A depends on the size of cartel B.

 

 

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