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monopoly regulation and fair trade act

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monopoly regulation and fair trade act

2 Competition Laws & Enforcement Decrees

MONOPOLY REGULATION

AND FAIR TRADE ACT

    MONOPOLY REGULATION AND FAIR TRADE ACT 3

    MONOPOLY REGULATION AND FAIR TRADE ACT

    Enacted by Law No. 3320, December 31, 1980

    Amended by Law No. 3875, December 31, 1986

    Amended by Law No. 4198, January 13, 1990

    * Engineering Technology Promotion Law No. 4501, November 25, 1992

    Amended by Law No. 4513, December 8, 1992

    Amended by Law No. 4790, December 22, 1994

    * Government Organization Act No. 4832, December 23, 1994

    Amended by Law No. 5235, December 30, 1996

    Amended by Law No. 5528, February 24, 1998

    Amended by Law No. 5813, February 5, 1999

    *Fair Labelling and Advertising Act No. 5814

    Amended by Law No. 6043, December 28, 1999

    Amended by Law No. 6371, January 16, 2001

    Amended by Law No. 6651, January 26, 2002

    Amended by Law No. 6705, August 26, 2002

    Amended by Law No 7315, December 31, 2004

    CHAPTER 1 GENERAL PROVISIONS

Article 1 Purpose

    The purpose of this Act is to promote fair and free competition, to thereby encourage creative enterprising activities, to protect consumers, and to strive for balanced development of the national economy by preventing the abuse of Market-Dominant Positions by enterprisers and the excessive concentration of economic power, and by regulating improper concerted acts and unfair business practices.

Article 2 Definitions

    For the purpose of this Act, the definitions of terms shall be as follows:

    1. The term “enterpriser” means a person who conducts a manufacturing

    business, service business, or any other business. Any officer, employee, agent, or other person who acts in the interest of the enterpriser shall be deemed as an enterpriser with regards to the application of provisions pertaining to the enterprisers organization:

    1-2. The term “holding company” means a company that makes

    controlling any domestic company's business through the ownership

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    of stocks (including equities. Hereinafter the same shall apply) as its

    primary business and whose total assets are above an amount

    determined by Presidential Decree. In this case, the standards for

    primary business shall be determined by Presidential Decree;

    1-3. The term “subsidiary” means a domestic company whose business is

    controlled by the holding company under the criteria as prescribed

    by the Presidential Decree;

1-4. The term “business related sub-subsidiary” means a domestic

    company whose business is controlled by subsidiaries, and being

    closely related to subsidiaries concerned determined by Presidential

    Decree;

2. The term “Business Group” means a group of companies whose

    businesses are substantially controlled by the same person according to the following distinction pursuant to the standards prescribed by Presidential Decree:

    (a) Where the “same person” is a company, a group composed of such

    person and one or more companies controlled by him; and

    (b) Where the “same person” is not a company, a group composed of

    two or more companies controlled by him.

    3. The term “affiliated company” means that where two or more companies belong to the same Business Group, each company is an “affiliated company” of the others;

    4. The term “enterprisers organization” means a juristic person or federation that is organized by two or more enterprisers for the purpose of promoting their common interests, regardless of the organization's form;

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    5. The term “officer” means a director, representative director, managing partner with unlimited liability, auditor or person in a similar position, or a commercial employer, such as a manager, etc. who is capable of executing general business for the main or a branch office;

    6. The term “resale price maintenance” means an act by which an enterpriser compels, in trading the goods or services, a counterpart enterpriser or an enterpriser by next stage of transaction to sell or provide them only at a price fixed in advance at each stage of distribution, or conducts transactions under any agreement or binding condition for that purpose;

    7. The term “market-dominating enterpriser” means any enterpriser holding Market Dominant who can determine, maintain, or change the prices, quantity or quality of commodities or services or other terms and conditions of business as a supplier or customer in a particular business area individually or jointly with other enterprisers. In determining whether an enterpriser is “a

    market-dominating enterpriser”, his market share, whether and to what extent any barriers to enter into his market exist, and the relative size of competitive enterprisers shall be comprehensively taken into account; provided that an enterpriser whose annual total sales or purchases are less than one billion won shall be excluded;

    8. The term “particular business area” means an area in which any competitive relation exists or may exist, by the subject, stage, or geographical area of such trade;

    8-2. The term “practices practically suppressing competition” means practices which impact or threaten to impact the determination of price, quantity, quality, or other terms or conditions of trading in accordance with the intent of a certain enterpriser or an enterprisers organization, because of reduced competition in a particular business area; and

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    9. The term “credit” means any loan and guarantee or acceptance of

    company obligation by domestic financial institutions.

    10. The term “financial industry or insurance industry” means the

    financial and insurance businesses under the Korea Standard

    Industrial Classification notified by the Commissioner of the Korea

    National Statistical Office pursuant to the provision under Article 17

    (Classification of Statistical Data) Paragraph 1 of the Statistical Act.

Article 2-2 Application to Extra-Territorial Activities

    Even though any activities are taken place in overseas, if they have any influence on domestic market, the Act shall be applied.

    CHAPTER 2 PROHIBITION OF ABUSE OF Market-Dominant Positions

    Article 3 Improvement, Etc. of Monopoly or Oligopoly in Market Structures

    (1) The Fair Trade Commission shall establish and implement action plans

    to promote competition in markets in which monopolies or oligopolies

    have existed for an extended period of time in relation to the supply or

    demand of goods or services.

    (2) The Fair Trade Commission may give opinions to the chief-officers of the

    appropriate administrative authorities as to the introduction of

    competition or other measures necessary to improve market structures,

    where it appears to be necessary for the Commission to carry out action

    plans formulated under paragraph (1).

    (3) The Fair Trade Commission shall research the market structures and

    announce the results in order to establish and promote the action plans

    referred to in paragraph.

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    (4) The Fair Trade Commission may request an enterpriser submit data necessary for the research and announcement of the market structure referred to in paragraph (3).

    (5) The Fair Trade Commission may entrust the affairs referred to in paragraphs (3) and (4) to other agencies under conditions as prescribed by Presidential Decree.

    Article 3-2 Prohibition of Abuse of Market-Dominant Positions

    (1) No market-dominating enterpriser shall commit acts falling under any of

    the following subparagraphs (hereinafter referred to as “abusive acts”):

    1. An act determining, maintaining, or changing unreasonably the price of

    commodities or services (hereinafter referred to as the “price”);

    2. An act unreasonably controlling the sale of commodities or provision of

    services;

    3. An act unreasonably interfering with the business activities of other

    enterprisers;

    4. An act unreasonably impeding the participation of new competitors;

    and

    5. An act unfairly excluding competitive enterprisers, or which might

    considerably harm the interests of consumers.

    (2) Categories or standards for abusive acts shall be determined by Presidential Decree.

Article 4 Presumption of Market-Dominating Enterpriser

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    An enterpriser whose market share in a particular business area falls under any of the following subparagraphs shall be presumed to be a market-dominating enterpriser as referred to in subparagraph 7 of Article 2:

    1. Market share of one enterpriser is 50/100 or more; or

    2. The total market share of not less than three enterprisers is 75/100 or

     that those whose market share is less than 10/100 more; provided

    shall be excluded.

Article 5 Corrective Measures

    Where there exists any act violating the provisions of Article 3-2, the Fair Trade Commission may order the market-dominating enterpriser involved to reduce prices, to discontinue the act that is a violation, to announce the fact of corrective order to the public, and to take other measures necessary for correction.

Article 6 Surcharge

    In the case of abusive acts by a market-dominating enterpriser, the Fair Trade Commission may impose upon such an enterpriser surcharges not exceeding an amount equivalent to 3 percent of the turnover determined by Presidential Decree (referring to profits of business particularly for the person designated by Presidential Decree. The same shall apply hereinafter); provided

    that under the Presidential Decree, where there is no turnover, or where it is difficult to compute the turnover (hereinafter referred to as “in the absence of turnover, etc.”), surcharges may be imposed up to but not exceeding one billion won.

CHAPTER 3 RESTRICTION ON THE COMBINATION OF ENTERPRISES AND

     REPRESSION OF THE ECONOMIC POWER CONCENTRATION

Article 7 Restriction on Combination of Enterprises

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    (1) No one shall, directly or through a person determined by Presidential Decree as having special interest (hereinafter referred to as the “person

    with special interest”), substantially lessen.

    (2) Competition in a particular business area by conducting practices falling under any of the following subparagraphs (hereinafter referred to as “combination of enterprises”); provided that this shall not apply where a

    person other than a company whose total assets or turnover (referring to the sum of total assets or turnover of affiliated companies) meets an amount determined by Presidential Decree (hereinafter referred to as “large company”), performs an act falling under subparagraph 2:

    1. The acquisition or ownership of stocks of other companies;

    2. The concurrent holding of an officer's position in another company (hereinafter referred to as the “concurrent holding of an officer's position”) by an officer or employee (referring to a person who continues to be engaged in the affairs of the company, but is not an officer; hereinafter the same shall apply);

3. A merger with other companies;

    4. An acquisition by transfer, lease or acceptance by mandate of the whole or main part of business of another company, or the acquisition by transfer of the whole or main part of fixed assets used for the business of another company (hereinafter referred to as the “acquisition by transfer of business”); and

5. Participation in the establishment of a new company; provided that

    this shall not apply to the following cases.

    (a) Where a person other than persons with special interests

    (excluding those determined by Presidential Decree) does not

    participate in the establishment of a new company; or

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    (b) Where a person participates in the establishment of a company by

    division under Article 530-2 (1) of the Commercial Act.

    (2) The provisions of paragraph (1) shall not apply where the Fair Trade Commission deems that a combination of enterprises falls under any of the following subparagraphs. In this case, the parties concerned shall prove that they meet the requirements:

    1. Where the promotion of efficiency attainable through the combination of enterprises is greater than the negative effect produced by restricted competition; and

    2. Where such combination is made with an inviable company, falling under the requirements determined by Presidential Decree, such as a company whose total capital in a balance sheet is less than its paid-in capital for a reasonable period of time.

    (3) No person shall incorporate another company by a coercive or any other unfair method.

    (4) If a combination of enterprises falls under any of the following subparagraphs, it is presumed that competition is practically suppressed in any particular business area:

    1. In cases where the aggregate of the market share of a company taking part in a combination of enterprises (referring to the aggregate of market shares of the affiliated companies; hereafter the same shall apply in this Article) falls under any of the following categories: and

    (a) In a case where the aggregate market share of the company

    concerned satisfies the presumptive requirements for a market-

    dominating enterprise;

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