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CHAPTER 5 PROHIBITION OF UNFAIR BUSINESS PRACTICES

By Steve Carter,2014-06-26 22:45
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CHAPTER 5 PROHIBITION OF UNFAIR BUSINESS PRACTICES ...

    (1) NO enterpriser shall commit any act falling under any of the following subparagraphs and that is likely to impede fair trade (hereinafter referred to as

    unfair business practices), or make an affiliated company or other enterprisers

    perform such an act;

    1. An act which unfairly refuses any transaction, or discriminates against a certain transacting partner;

2. An act designed to unfairly exclude competitors;

    3. An act unfairly coercing or inducing customers of competitors to deal with oneself;

    4. An act making a trade with a transacting partner by unfairly taking advantage of his position in the business area;

    5. An act of trade under terms and conditions which unfairly restrict or disrupt business activities;

6. Deleted;

    7. An act assisting a person with a special interest or other companies by providing advanced payment, loans, manpower, immovable assets, stocks and

    bonds, or intellectual properties thereto, or by transacting under substantially

    favorable terms therewith; anc

    8. Any act that threatens to impair fair trade other than those listed in subparagraphs 1 through7.

    (2) The categories or standards for unfair business practices shall be

determined by presidential Dceree.

(3) If necessary for the prevention of acts violating the provisions of

    paragraph (1), the Fair Trade Commission may make and announce publicly guidelines to be observed by enterprisers.

    (4) In order to prevent the unreasonable inducement of customers, the enterprisers or enterprisers organization may voluntarily write a code(hereinafter referred to as the fair competition code)

    (5) Enterprisers or an enterprisers organization may request that the Fair Trade Commission examine whether or not the fair competition code as referred to in paragraph (4) violates the provisions of paragraph (1) 3 or 6.

Article 24 Corrective Measures

    The Fair Trade Commission may, when an act in violation of the provisions of Article 23 (1) is committed, order the enterpriser concerned to discontinue those unfair business

    practices, to delete any pertinent provisions from a contract, to announce the fact of

    receiving corrective order to public, or to take any other necessary corrective measures

    against that act.

Article 24-2 Surcharge

    In the event of the occurrence of practices in violation of the provisions of Article 23, Paragraph 1, the Fair Trade Commission may impose upon the person concerned a surcharge not exceeding the amount equivalent to two percent (five percent in case of violating the provisions of subparagraph 7) of the turnover determined by Presidential Decree. In the case of absence of the turnover, a surcharge may be imposed up to but not exceeding five hundred million won.

(1) No enterpriser or enterprisers organization shall enter into an international

    agreement or international contract as prescribed by Presidential Decree,

    (hereinafter referred to as international contract) containing provisions

    concerning improper concerted acts, unfair business practices, or resale price

    maintenance; provide that the foregoing shall not apply when the Fair Trade

    Commission deems the effect of said agreement upon competition in a particular

    business area to be negligible or deems that there are other unavoidable

    reasons to validate that contract.

    (2) The definition of policies regarding improper concerted acts, unfair business practices, and resale price maintenance as referred to in paragraph (1) may be dertermined and public notice given by the Fair Trade Comission.

Upon entering into an international contract, the enterpriser or enterprisers

    organization may request that the Fair Trade Commission determine whether

    the contract violates any provision of Article 32 (1) in accordance with the

    procedure set forth by Presidential Decree.

The Fair Trade Commission may, when an international contract violates or is

    likely to violate the provisions of Article 32 (1), order the enterpriser or the enterpriser organization concerned to cancel the contract, to amend or alter the contract, or to take other necessary corrective measures.

    In the case of the conclusion of international contracts in violation of Article 32, the Fair Trade Commission may impose upon the relevant enterpriser

    organization surcharges up to but not exceeding 500 million won, or upon the

    enterpriser concerned surcharges up to but not exceeding an amount equivalent

    to two percent of turnover as determined by Presidential Decree; provided that in the instance of an absence of turnover, surcharges may be imposed not

    exceeding 500 million won.

    (1) The types of and criteria for Unfair Business Practices of Article 23(Prohibition of Unfair Business Practices), Paragraph (2) of the Act are as listed in Appendix 1.

(4) When it is deemed necessary, the Fair Trade Commission may establish

    and publicly announce detailed standards of types of and criteria for Unfair

    Business Practice of Paragraph (1) for the purpose of its application to a

    particular area or act. In this case, the Fair Trade Commission shall hear the opinion of the heads of relevant administrative agencies in advance.

When the Fair Trade Commission has received a request for the examination of

    the Fair Competition Code under Article 23(Prohibition of Unfair Business

    Practices), Paragraph (5) of the Act, the Commission shall notify the requester of the examination results within sixty days of the request.

1. Refusal to Deal

    Unreasonably refusing to transact stipulated in the first half of Subparagraph

    1 of Article 23 (prohibition on Unfair Business Practices) Paragraph(1) of the

Act means as follows.

    (1) Collective refusal to deal Without justifiable reason, in collusion with ones competitors, one refuses to

    initiate business with a certain enterprise; or suspends transaction or significantly restricts the quantity or nature of commodities or service in transaction with regard to a certain enterprise in a continuous transaction relation.

    (2) other types of refusal to deal Unreasonably, one refuses to initiate business with a certain enterprises; or suspends transaction or significantly restricts the quantity or nature of commodities or services in transaction with regard to with a certain enterprise in a continuous transaction relation.

    2. Discriminatory Treatment Unreasonable discrimination against certain transaction partners

    stipulated in the second half of Subparagraph 1 of Article 23(Prohibition on Unfair Business Practices)Paragraph (1) of the Act means as follows:

    (1) Price Discrimination Unreasonably, depending on the transaction partner or transaction territory, one transacts at a significantly favorable or unfavorable price.

(2) Discrimination in terms and conditions of transaction

    Unreasonably, one discriminates terms and conditions, such as quantity or quality, significantly favorable or favorable or unfavorable toward a certain Enterprise.

    (3) Discrimination in favor of Affiliated Corporations Without justifiable reasons, discriminating trading terms and conditions, such as price, quantity or quality, significantly favorable or unfavorable toward certain partners in order to benefit affiliated corporations.

    (4) Collective discrimination A group unreasonably discriminates for or against a certain enterprise, thereby

putting such Enterprise at a significant advantage or disadvantage.

3. Elimination of Competitors

    Unreasonably excluding competitors stipulated in Subparagraph 2 of Article

    23 (Prohibition on Unfair Business Practices) Paragraph (1) of the Act means as

    follows.

(1) Unjustifiable discount

    One continues to supply ones commodities or services at a price considerably lower than the supply cost without a justifiable reason or to supply commodities

    or services at an unduly lower price, thereby threatening the viable existence of

    ones competitors or competitors of its Affiliated Corporations.

(2) Unjustifiably high-Priced purchase

    Unjustifiably, one purchases commodities or services at a higher cost than the

    normal transaction price, thereby threatening the viable existence of ones

    competitors of its Affiliated corporations.

4. Unfair Luring of Customers

    Unreasonably luring customers of competitors to deal with oneself as

    stipulated in the first half of Subparagraph 3of Article 23(Prohibition on Unfair

    Business Practices)Paragraph (1) of the Act means as follows:

(1) Luring customers by promising unjustifiable gains

    One Provides or Promise to provide unjust or excessive gains in light of the

    normal business practices and thus lures away competitors customers.

(2) Luring customers by fraudulent means

    Other than through labeling or advertising provided for in Subparagraph 9,

    mislead competitors customers by falsely claiming that the content, terms and conditions, or other transactional matters involving ones commodities or

    services are significantly superior to or much more advantageous than thy

    actually are or those of competitors; or that the content, terms and conditions,

    or other transaction matters involving the competitors commodities or services

    are significantly less advantageous than or inferior to what they actually are or

    those of ones own commodities of services, thereby luring away the customers

of ones competitors.

(3) Luring customers by other methods

    Unduly hinder transactions between a competitor and its customers by impeding

    the execution of contracts or by encouraging such customers to breach the

    contracts, thereby luring away the competitors costomers.

5. Coercion in Dealing

    Unreasonably coercing customers of competitors to deal with oneself as

    stipulated in the second half of Subparagraph 3 of Article 23(Prohibition on

    Unfair

    Business Practices) Paragraph(1) of the Act means as follows:

(1) Tie-in Sales

    In supplying ones commodities or services to a transaction partner, one forces

    the partner wrongfully, in light of the normal business practice, to purchase

    another commodity or service from oneself or from an enterprise whom one

    designates.

(2) Sales to employees

    Wrongfully, one forces ones or ones Affiliated Corporations officers or

    employees to purchase or sell ones or the Affiliated Corporations commodities

    or services.

(3) Other types of coercion

    One offers ones transaction partner undue terms and conditions and other

    disadvantages in light of normal practice and thus forces the partner to transact

    with oneself or an enterprise whom one designates.

6. Abusing Dominant Position

    Unreasonably taking advantage of ones bargaining position in transaction with

    others as stipulated in Subparagraph 4 of Article 23(Prohibition on Unfair

    Business Practices) Paragraph (1)of the Act means as follows:

(1) Coercion to purchase

    One forces ones transacting partner to purchase commodities or services

which the partner does not with to purchase.

(2) Coercion to provide benefit

    One forces ones transacting partner to provide one with economic benefits

    such as money, commodities or services.

(3) Coercion of sales target

    Concerning the commodities or services which one supplies, one designates to

    ones transacting partner a target for their transaction and forces the partner to fulfill the target.

(4) Offering disadvantages

    By methods other than those in the above subparagraph 1 to 3, one establishes

    or alters transaction conditions to the disadvantages of ones transaction

    partner, or gives the partner disadvantages in the execution process of the

    transaction.

(5) Interference in management

    Interfering in the management activities of transaction partners by requiring

    ones approval or directions in hiring or firing officers or employees of the transacting partner, or by restricting manufacturing articles, scale of facility,

    production quantity or content of transaction.

7. Transaction Based upon Restrictive Conditions

    Transacting with others on terms and conditions which unreasonably restrict

    business activities as stipulated in the first half of Subparagraph 5 of Article

    23(Prohibition on Unfair Business Practices) Paragraph (1) of the Act means as

    follows:

(1) Exclusive Dealings

    Wrongfully, one transacts with an enterprise on the condition that the enterprise

    does not deal with ones competitor or an Affiliated Corporations competitors.

(2) Restriction on transaction area or partner

    Transact with a partner on the undue condition that the partner limits its

    transaction area or partner(s).

8. Interference in Business Activities of Other Enterprises

    Acts which unreasonably disrupt business activities of other Enterprises

    as stipulated in the second half of Subparagraph 5 of Article 23(Prohibition on Unfair Business Practices) Paragraph (1) of the Act refers to any of the following acts:

    (1) Unfair use of technology Unduly using the technology of other Enterprise to the point of seriously hampering the business activities thereof

    (2) Unfair luring or hiring of personnel Unjustifiably luring away or hiring the personnel of other Enterprise to the point of seriously hampering the business activities thereof.

(3) Interference in the change of transacting partner

    Unjustifiably interfering in the change of transaction counterpart of other Enterprise, to the point of seriously hampering the business activities thereof.

(4) Interference by other methods

    Interfering with business activities of other Enterprise through unjustifiable means other than those in Subparagraphs 1 to 3 to the point of seriously hampering the business activities thereof.

9.

    Labeling and Advertising>

10. Undue financial, asset, and manpower support

    The following acts constitute unreasonably providing Specially Related Persons

    or other corporations with temporary payment, loan, manpower, real estate, securities, intangible property rights, etc., or aid Special Related Person or other corporations by trading at extremely favorable terms in Subparagraph 7

    of Article 23(Prohibition on Unfair Business Practices) Paragraph (1) of the Act.

    (1) Undue financial support Aid a Specially Related Person or other corporations through the provision of

    excessive economic benefit by providing or transacting them with funds, such as temporary payment, loan, etc., at substantially high or low costs or by providing or transacting with such funds in substantial amounts.

    (2) Undue asset support Aid a Specially Related Person or other corporations though the provision of excessive economic benefit by providing or transacting them with assets, such as real estate, securities intangible property rights, etc., at substantially high or low costs or by providing or transacting with such assets in substantial amounts.

    (5) Undue manpower support Aid a Specially Related Person or other corporations through the provision of excessive economic benefit by providing them with manpower at substantially high or low costs or by providing such manpower in substantial amounts.

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