Publication
Australian Arbitration Week 2024
Australian Arbitration Week took place between 13 – 18 October 2024 in Brisbane.
Global | Publication | May 2021
The Monopoly Regulation and Fair Trade Act (the “MRFTA”) provides for four main types of prohibitions:
The purpose of the MRFTA is to promote fair and free competition, to encourage creative enterprising activities, to protect consumers and to strive for balanced development of the national economy, by preventing any abuse of dominance by business entities and any excessive concentration of economic power, and by regulating undue collaborative acts and unfair trade practices.
The Act generally prohibits “unfair collaborative acts”, i.e. any agreements between competitors that unreasonably restrain competition. These include:
The Act also prohibits the same restrictive activities where they are committed by business associations.
Abusive conduct by a dominant business entity is prohibited under the MRFTA. The Act does not provide for a general definition for abusive conduct. Instead, the MRFTA lists six types of specified abusive behaviour:
In addition to major antitrust prohibitions, the MRFTA regulates unfair trade practices, which consists of the following eight categories.
The MRFTA prohibits business combinations that substantially lessen competition in Korea, and provides for a merger control regime under which certain transactions must be approved by the Korea Fair Trade Commission (KFTC) if the relevant merger control thresholds are met. Transactions that may fall within the scope of the merger control rules include acquisition or ownership of 20 per cent or more of the shares of another company (15 per cent in the case of a publicly listed company); an increase in an existing shareholding of a shareholder who already owns 20 per cent (or 15 per cent in the case of a public company) or more of the shares when such an increase leads it to become the largest shareholder (even if the existing shareholding already gave rise to joint control); an interlocking directorate; a merger, an acquisition by transfer of business (or sometimes substantial assets); and participation in the establishment of a new company or a joint venture - provided there are two or more parent companies (not affiliated to each other) subscribing for the voting shares of the new company. The Korean merger control rules do not make a distinction between full function and non-full function joint ventures and apply to both.
The KFTC can order the parties to discontinue the practice, publicly announce the fact that the company received a corrective order by the KFTC or take other actions needed for remedies. In addition, the KFTC can order the market dominant company to reduce prices.
The KFTC can impose an administrative fine up to 10 per cent of the turnover generated by the sale of relevant goods or services during the period of a violation. Criminal penalties can also be imposed by the courts. Companies can be subject to a criminal fine of up to KRW200 million (US$177,000). In addition, individuals can be subject to either imprisonment of up to three years or a criminal fine of up to KRW200 million (US$177,000). It should be noted that damages up to three times may be awarded for cartel conduct.
Companies can be subject to administrative fines up to three per cent of the turnover generated by the sale of the relevant goods or services during the period of a violation. Companies can also be subject to a criminal fine of up to KRW200 million (US$177,000). In addition, individuals can be subject to either imprisonment of up to three years or a criminal fine of up to KRW200 million (US$177,000).
Companies can be subject to administrative fines of up to two percent of the turnover generated by the sale of the relevant goods or services during the period of the violation. Companies can also be subject to a criminal fine of up to KRW150 million (US$133,000). The culpable individual can be subject to either imprisonment of up to two years or a criminal fine up to KRW150 million (US$133,000).
The MRFTA is also applicable to firms located outside Korea whose behaviour directly affects competition and consumers in domestic markets. The MRFTA’s merger control provisions are also applicable to foreign mergers.
Enforcement authority rests with the KFTC, a ministerial-level central administrative organization under the authority of the Prime Minister and also functions as a quasi-judicial body. The KFTC formulates and administers competition policies, and also deliberates, decides, and handles antitrust cases. The KFTC consists of a committee, the decision-making body, and a secretariat, a working body. The committee consists of nine commissioners, who deliberate and make decisions on competition and consumer protection issues. Criminal cases can be brought either by the KFTC or by the public prosecutor’s office.
In addition, a person can claim damages in the district court for losses suffered from an agreement that unreasonably restricts competition or from abusive conduct.
The KFTC has adopted program for the detection of anticompetitive agreements and cartels whereby automatic immunity from all or part of the administrative fines can be granted. The reduction for a party who comes forward and provides evidence of a cartel is as follows:
The KFTC is granted broad administrative investigative powers, allowing it to:
The KFTC investigators can:
Any person who refuses, interferes with, or evades the KFTC investigation through verbal abuse, assault, or intentionally blocking or delaying access to the site is subject to a punishment by imprisonment for not more than three years or by a fine not exceeding KRW200 million (US$177,000). On the other hand, any person who disobeys an order to submit a report, materials, or articles or submits a false one and any person who rejects, interferes with, or evades an investigation by concealing, discarding, or refusing access to, materials, or by forging or falsifying materials during an investigation is subject to a fine not exceeding KRW100 million (US$88,000).
Key activities of the KFTC have included:
Year | Total fines |
Number of cases |
Main types of cases |
2015 |
KRW474.4 million (around US$420,000) |
35 | Cartels and bid-rigging |
2016 |
KRW1.9 trillion (around US$1.6 billion) |
46 | Cartels, bid-rigging and abuse of dominance |
2017 |
KRW379.5 billion (around US$336 million) |
30 | Cartels and bid-rigging |
2018 |
KRW272.2 billion (around US$240 million) |
28 | Cartels, bid-rigging and abuse of dominance |
2019 |
KRW91.9 billion (around US$80 million) |
25 | Cartels, bid-rigging and abuse of dominance |
2020 |
KRW222 billion (around US$196 million) |
29 | Cartels, bid-rigging and abuse of dominance |
The KFTC reviewed more than 850 merger cases notified in 2020, a 13 per cent increase from 766 in 2019. The KFTC imposed remedial measures on three cases that were found to have substantial competitive concerns.
Year | Number of cases |
Unconditional approvals |
Conditional approvals |
Domestic |
Foreign |
2015 |
669 |
98.8% |
1.2% |
80% |
20% |
2016** |
646 |
99.1% |
0.9% |
76% |
24% |
2017 |
668 |
99.4% |
0.6% |
77% |
23% |
2018 |
702 |
99.6% |
0.4% |
81% |
19% |
2019 |
766 |
99.3% |
0.7% |
78% |
22% |
2020 |
865 |
99.7% |
0.3% |
85% |
15% |
* In number and % of cases
** Two transactions were prohibited in 2016
Monopoly Regulation and Fair Trade Act
Korea Fair Trade Commission
#95, Dasom 3-ro, Sejong-si, Korea
Tel: +82 44 200 4315 25
Fax: +82 44 200 4343
Email: kftc@korea.kr
Website: http://eng.ftc.go.kr
Publication
Australian Arbitration Week took place between 13 – 18 October 2024 in Brisbane.
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