Competition law in South Korea: overview

A Q&A guide to competition law in South Korea.

The Q&A gives a high level overview of merger control, restrictive agreements and practices, monopolies and abuse of market power, and joint ventures. In particular, it covers relevant triggering events and thresholds, notification requirements, procedures and timetables, third party claims, exclusions and exemptions, penalties for breach, and proposals for reform.

To compare answers across multiple jurisdictions visit the Competition Country Q&A tool.

This Q&A is part of the PLC multi-jurisdictional guide to competition and cartel leniency. For a full list of jurisdictional Q&As visit www.practicallaw.com/competition-mjg.

For a full list of jurisdictional Cartel Leniency Q&As, which provide a succinct overview of leniency and immunity, the applicable procedure and the regulatory authorities in multiple jurisdictions, visit www.practicallaw.com/leniency-mjg.

Jae Young Kim and Paul S Rhee, Yoon & Yang LLC
Contents

Merger control

1. What (if any) merger control rules apply to mergers and acquisitions in your jurisdiction?

Regulatory framework

Articles 7 and 12 of the Monopoly Regulation and Fair Trade Act (MRFTA) outline the substantive standards for anti-competitive business combinations and notification requirements. The Enforcement Decree of the MRFTA provides additional regulations concerning the authorities and standards for merger control.

Regulatory authority

Enforcement authority rests with the Korea Fair Trade Commission (KFTC), an administrative body established under the Prime Minister's Office, which, as part of its work, issues numerous standards, notices and guidelines regarding its interpretation and implementation of the relevant legislation (see box, The regulatory authority).

Triggering events/thresholds

2. What are the relevant jurisdictional triggering events/thresholds?

Triggering events

Business combinations that are subject to merger control include the following transactions (Articles 7(1) and 12(1), MRFTA):

  • Acquisition or ownership of 20% or more of the shares of another company (or 15% for companies listed on the Korea Exchange).

  • Acquisitions of additional shares in a company where the acquiring party already holds 20% or more of the shares in the company (15% for companies listed on the Korea Exchange) and the acquisition results in the acquiring party becoming the largest shareholder.

  • Interlocking directorate (where an officer or employee holds an officer's position in another company).

  • Merger with other companies.

  • Acquisition by transfer of business (or sometimes substantial assets).

  • Participation in the establishment of a new company or a joint venture (see Question 37). Only the investor with the largest stake of a new company or joint venture is required to notify.

Thresholds

The general thresholds for notification are as follows:

  • One party to the transaction has worldwide assets or turnover of at least KRW200 billion.

  • The other party has total assets or annual turnover of at least KRW20 billion.

In addition to these general thresholds, local thresholds are applied to overseas mergers, including transactions where either:

  • A foreign company acquires another foreign company.

  • A Korean company acquires a foreign company.

If each of these merging parties has local sales revenues of at least KRW20 billion in the Korean market, notification of the merger is mandatory.

Notification

3. What are the notification requirements for mergers?

Mandatory or voluntary

Notification is mandatory where the size of the merging parties exceeds the thresholds (see Question 2, Thresholds).

Timing

Pre-merger notification is required for certain types of combination where either of the parties to the transaction is a large company that has total assets or annual turnover of at least KRW2 trillion (including the assets and turnover of its affiliates).

If a large company takes part in a transaction, notification can be filed at any time before the completion of the transaction, as long as the transaction is not completed before it is cleared by the KFTC.

An interlocking directorate is not subject to the pre-notification requirement even if one of the parties is a large company (see Question 2, Triggering events).

Mergers in which only small companies are engaged require a post-merger notification. For these mergers, notification should be made within 30 days after the completion of the merger.

Formal/informal guidance

A system of voluntary prior notification is also in place. A company that plans to merge with another can ask the KFTC to review the planned merger before the ordinary notification period and decide whether the planned merger will substantially restrict competition (see Question 7). The review period is 30 days but can be extended by an additional period of 90 days (up to a total of 120 days) if the KFTC deems further examination necessary.

Responsibility for notification

The acquiring companies must notify. For an acquisition or ownership of another company's shares, the party that acquires or owns at least 20% of another company (or at least 15% for companies listed on the Korea Exchange) must notify the merger. For an establishment of a new joint venture, the largest investor must notify.

Relevant authority

All notifications must be made to the Merger and Acquisition Division of the KFTC.

Form of notification

Notification forms can be obtained as attachments to the Merger Notification Guidelines, which are available at the KFTC website (see box, The regulatory authority).

Filing fee

There is no filing fee for the KFTC's review or notification.

Obligation to suspend

In the case of pre-notification, a merger cannot be closed or implemented before the KFTC completes its review.

Procedure and timetable

4. What are the applicable procedures and timetable?

The KFTC must, in principle, finish reviewing pre-notified mergers within 30 days after receiving the notification. Most notified mergers pass the KFTC review within 30 days, although whenever the KFTC deems it necessary to extend the period, it can do so by informing the party.

The majority of the notified mergers pass the KFTC review without further requests for information. If the KFTC finds it necessary to request additional information, mostly related to issues raised during its review, it will ask the parties to provide the information within a certain time limit. If, for example, the KFTC is concerned about the anti-competitiveness of a merger, it may extend the review period up to a maximum of 90 days after the lapse of the first 30-day review period (see Question 3, Formal/informal guidance).

If a merger raises substantial issues, the KFTC can decide to refer the case to a full Commission hearing, before the decision-making body of the KFTC, which comprises nine KFTC commissioners (see Question 5, Procedural stage).

The KFTC will decide at the end of the review to either approve the transaction (conditionally or unconditionally) or prohibit the transaction (see Question 8).

For an overview of the notification process, see flowchart, South Korea: merger notifications.

Publicity and confidentiality

5. How much information is made publicly available concerning merger inquiries? Is any information made automatically confidential and is confidentiality available on request?

Publicity

The KFTC does not publicise merger notifications or related information obtained during the review. The KFTC only publicises the result of its review if an anti-competitive merger is brought to the full Commission hearing or if it is in the public interest.

Procedural stage

If the KFTC decides that a merger substantially lessens competition in a particular market and refers the case to the full Commission hearing, it will disclose the merger and related issues to the public to ensure transparency in the proceedings.

Automatic confidentiality

The KFTC keeps information related to business secrets confidential. If a third party requests disclosure of information on a particular merger, the KFTC will only provide limited information to protect the confidentiality of business secrets.

Confidentiality on request

Any party can request that certain information it provides to the KFTC should be kept confidential.

Rights of third parties

6. What rights (if any) do third parties have to make representations, access documents or be heard during the course of an investigation?

Representations

Third parties are not allowed to actively participate in the review process. However, they can submit information and their opinions.

Document access

Third parties can request the KFTC for data relating to measures that the KFTC has taken. The KFTC must comply with such requests if it feels it is in the public interest. The persons providing the relevant data must grant consent.

Be heard

Third parties can also be heard during the full Commission hearing, if the KFTC grants this.

Substantive test

7. What is the substantive test?

The MRFTA prohibits a merger which substantially restricts competition in a particular market. A substantial restriction of competition refers to a situation where a certain company or business group influences with a certain degree of freedom (this has an imprecise meaning; it can also be interpreted as "with a considerable degree of freedom") one or more of the following within a particular market (KFTC Merger Review Guidelines):

  • Price.

  • Output.

  • Quality.

  • Other terms of trade.

In assessing whether a horizontal merger substantially restricts competition in a particular market, the KFTC considers multiple factors such as the:

  • Market concentration before and after the business combination.

  • Possibility of collusion between competing businesses.

  • Degree of import competition and the international competition situation.

  • Possibility of new entrants.

  • Existence of similar goods and adjacent markets.

A merger is presumed to substantially restrict competition in a particular market if the combined market share of the merging company (Article 7(4), MRFTA):

  • Meets the requirements for a market dominant company (that is, the market share of a single company is above 50%, or the sum of the market share for no more than three companies is above 75% in a particular market).

  • Is the largest in the relevant market.

  • Exceeds the market share of the second-ranking company in the market by more than 25%.

All of these conditions must be satisfied.

A merger is considered not to substantially restrict competition if (Market Share Safe-harbour; section II.1. (5), KFTC Merger Review Guidelines):

  • For horizontal mergers, one of the following applies:

    • the post-merger Herfindahl-Hirschman Index (HHI) (an assessment of market concentration made by taking the sum of the squares of individual market shares of all industry participants) is less than 1,200;

    • the post-merger HHI falls between 1,200 and 2,500 and the HHI increase between the pre- and post-merger positions is less than 250 points; or

    • the post-merger HHI exceeds 2,500, and the HHI increase is less than 150.

  • For vertical and conglomerate mergers, either of the following applies:

    • in each of the relevant markets, the post-merger HHI is less than 2,500 and the market share of the party is less than 25%; or

    • the parties rank no higher than fourth in each of the relevant markets.

Remedies, penalties and appeal

8. What remedies can be imposed as conditions of clearance to address competition concerns? At what stage of the procedure can they be offered and accepted?

The KFTC can offer various remedies including:

  • Prohibition of transactions.

  • Disposition of all or parts of the shares acquired.

  • Resignation of an officer.

  • Transfer of business.

  • A party publishing that it has received a corrective order.

  • Restrictions on the business method or business scope of the combined enterprise to prevent the negative effects of restricted competition.

  • Any other behavioural measures regarding the methods or scope of business activities.

The Guidelines on Imposition of Merger Remedies define general principles of merger remedies and various factors to be taken into account when imposing different remedies.

A prohibition order is imposed only if partial divestiture is impossible or is insufficient to maintain effective competition.

Behavioural remedies are often considered when they are sufficient to eliminate threats to competition.

The KFTC can request the parties to make a report confirming compliance with remedies within a certain time period in order for the KFTC to monitor such compliance.

The parties can propose remedies at any stage of the KFTC's review. There is, however, no formal procedure of settlement that allows the KFTC to close any case without reaching an infringement decision by accepting commitments offered by the parties (see also Question 39).

 
9. What are the penalties for failing to comply with the merger control rules?

Failure to notify correctly

The MRFTA imposes an administrative fine of up to KRW100 million for failure to make a timely and correct notification.

Implementation before approval or after prohibition

The KFTC can impose an administrative fine of up to KRW100 million for implementation of a pre-notified merger before its approval.

Company executives responsible for implementing illegal mergers after prohibition of the merger by the KFTC are subject to either or both of:

  • Imprisonment of up to three years.

  • A criminal fine of up to KRW200 million.

Criminal prosecution is possible only when the KFTC files a complaint with the Prosecutor's Office.

Failure to observe

The KFTC can impose an administrative fine of up to 0.03% of the transaction value for each day the parties do not comply with its decisions, including remedial undertakings.

 
10. Is there a right of appeal against any decision? If so, which decisions, to which body and within which time limits? Are rights of appeal available to third parties or only the parties to the decision?

Rights of appeal and procedure

Any party engaged in a merger can file an appeal with the KFTC or Seoul High Court if dissatisfied with a decision of the KFTC. The appellant must file an appeal with the KFTC within 30 days of receiving the decision being challenged. It can also appeal to the court within 30 days for judicial review. If the appellant is dissatisfied with the result of the KFTC's review on its original decision it can still file an appeal to the court for judicial review within 30 days after receiving the KFTC's decision on the administrative complaint.

Third party rights of appeal

Third parties have no right of appeal.

Automatic clearance of restrictive provisions

11. If a merger is cleared, are any restrictive provisions in the agreements automatically cleared? If they are not automatically cleared, how are they regulated?

The KFTC's approval for a merger does not automatically clear all restrictive provisions. Although there are no formal rules or guidelines regarding these matters, they can be examined under the provisions regulating restrictive agreements (see Question 13).

Regulation of specific industries

12. What industries (if any) are specifically regulated?

The MRFTA applies to all economic sectors and industries and it does not have any provision for specific industries. However, in some specifically regulated industries (such as finance, telecommunication, and broadcasting), mergers must be notified to sector-specific regulators. In these industries, sector-specific regulators such as the Korea Communication Commission and the Financial Supervisory Commission have the power to authorise the concerned mergers. However, they are required by the relevant laws, which include the Telecommunications Business Act and the Act on Structural Improvement of Financial Industry, to consult with the KFTC regarding the competitive effect of the merger.

 

Restrictive agreements and practices

Scope of rules

13. Are restrictive agreements and practices regulated? If so, what are the substantive provisions and regulatory authority?

Article 19(1) of the MRFTA generally prohibits any agreements between competitors that unreasonably restrain competition. These include:

  • Fixing, maintaining or changing prices.

  • Determining terms of trade or payment conditions for goods or services.

  • Restricting production, distribution or transaction.

  • Limiting or allocating geographic areas or customers.

  • Restricting the establishment or extension of facilities and preventing the installation of new equipment.

  • Restricting the types or specifications of traded goods or services.

  • Jointly carrying out the main parts of a business, or jointly establishing a company for the same purpose.

  • Determining the successful bidder or the highest bid in bidding or auctions.

  • Any other practices that substantially restrict competition in a particular market by obstructing or restraining other companies' business activities.

Article 26 of the MRFTA prohibits the same restrictive activities where they are committed by business associations.

These restrictive agreements and practices are subject to the KFTC's administrative sanctions and to criminal prosecution if the KFTC files a complaint with the Prosecutor's Office against enterprises or individuals for violations that seriously restrain competition.

 
14. Do the regulations only apply to formal agreements or can they apply to informal practices?

The regulations apply not only to formal agreements but also to informal practices without explicit agreement where (Article 19(5), MRFTA):

  • Two or more enterprises are conducting any activity which restricts competition in a particular market (see Question 13).

  • Certain circumstances (such as meetings among the competitors) apply.

Exemptions

15. Are there any exemptions? If so, what are the criteria for individual exemption and any applicable block exemptions?

There are two areas that are generally exempted:

  • Restrictive practices that are legitimate under any industry-specific laws (Article 58, MRFTA). These are limited statutory exemptions over areas, such as small businesses.

  • Acts considered to be a reasonable exercise of IP rights, such as (Article 59, MRFTA):

    • patents;

    • utility models;

    • industrial designs;

    • copyrights;

    • trade marks.

However, this does not mean that the exercise of IP rights is always exempted. Acts carried out in the name of IP rights are subject to the MRFTA if they do not pursue the IP rights' goals of encouraging invention and authorship, but instead restrict competition in technology or product markets. Significant amendments to the Guidelines on the Examination of Unreasonable Exercise of Intellectual Property Rights came into effect on 7 April 2010. The KFTC takes enforcement of these Guidelines seriously.

In addition, some restrictive agreements can be exempted under Article 19(2) of the MRFTA if the KFTC authorises them because they meet the requirements specified in the Enforcement Decree of the MRFTA. These agreements must be conducted for purposes such as:

  • Industrial rationalisation.

  • Research and technology development.

  • Overcoming economic depression.

  • Industrial restructuring.

  • Rationalisation of transaction terms and conditions.

  • Enhancement of small- and medium-sized companies' competitiveness.

However, since the requirements are very hard to satisfy, there have been few applications for individual exemptions.

 
16. Are there any exclusions? Are there statutes of limitation associated with restrictive agreements and practices?

Exclusions

There is no statutory de minimis provision. However, the KFTC excludes certain restrictive practices (other than hard-core cartels) from law enforcement if the participants have less than a 20% market share in the relevant market (KFTC Guidelines on Examination of Concerted Activities).

Statutes of limitation

The KFTC may impose sanctions within five years from the commencement date of investigation by the KFTC. Also, the KFTC may impose sanctions within seven years from the cessation date of the conduct by the party if it does not commence its investigation.

Notification

17. What are the notification requirements for restrictive agreements and practices?

Notification

Parties must notify the KFTC if they want the KFTC to exempt or authorise any restrictive agreements.

Informal guidance/opinion

The KFTC introduced a preliminary business review system (Guidelines on Business Review) in 2004. Companies can now ask the KFTC to review whether a business activity violates the MRFTA before engaging in it. Applicants can ask for a review only of a specific and individual activity they are planning to engage in. The KFTC provides guidance within 30 days of receiving the application. The results represent the official view of the KFTC. Therefore, the KFTC will not take any subsequent legal measures against a practice that it considered to be legal.

Responsibility for notification

Two or more parties who wish to obtain authorisation for a restrictive agreement can apply to the KFTC. Either party can notify.

Relevant authority

An application for notification must be made to the KFTC.

Form of notification

The applicants must submit the application form set out in the KFTC Guidelines on Application for Approval of Concerted Activities.

Filing fee

No filing fee is charged when applying for authorisation of restrictive agreements and practices.

Investigations

18. Who can start an investigation into a restrictive agreement or practice?

Regulators

The KFTC can start investigations on its own initiative.

Third parties

The KFTC can start investigations on a third party's complaint.

 
19. What rights (if any) does a complainant or other third party have to make representations, access documents or be heard during the course of an investigation?

Representations

Usually, third parties (including complainants) do not have rights to actively participate. However, they can provide information and opinions at the KFTC's request or on their own initiative.

Document access

When third parties make a request to the KFTC to access data, the KFTC must comply if this is in the public interest. The person that provided the data must grant consent (see Question 21).

Be heard

Third parties can be heard before the KFTC issues corrective measures or imposes fines on the violators, if the KFTC permits this.

 
20. What are the stages of the investigation and timetable?

There are two stages in KFTC proceedings:

  • An investigation (usually conducted on the premises of the suspected violators) by the enforcement team of the KFTC to:

    • seize or request documents;

    • examine witnesses;

    • request answers to interrogatories.

    After the team review the information and documents obtained, the KFTC issues a written complaint to the suspected parties. The parties are then allowed to examine the complaint and the attached documents and to respond to it in writing or at an oral hearing for the full Commission deliberation (see below).

  • Deliberation at the full Commission, which comprises nine KFTC commissioners. The full Commission makes a final decision and then notifies the parties.

It is difficult to specify the timetable for cartel cases, but they usually take at least one year from the start of the investigation.

There is no particular procedure or time limit for investigations following notification.

 
21. How much information is made publicly available concerning investigations into potentially restrictive agreements or practices? Is any information made automatically confidential and is confidentiality available on request?

Publicity

The KFTC does not publicise the details of an investigation concerning a potential violation except if the case is being handled or if it is in the public interest (see Question 5, Publicity). The KFTC does not usually announce that a case is being handled but acknowledges that it is investigating it.

Automatic confidentiality

The KFTC keeps information that is essentially related to a party's business secrets confidential. When asked by a third party to disclose information on a particular case, the KFTC provides limited information to protect the confidentiality of business secrets (see Question 5, Automatic confidentiality).

Confidentiality on request

Any party can request that certain information it provides to the KFTC should be kept confidential (see Question 5, Confidentiality on request).

 
22. What are the powers (if any) that the relevant regulator has to investigate potentially restrictive agreements or practices?

The KFTC is granted broad administrative investigative powers, allowing it to (MRFTA):

  • Require suspected violators and other interested parties to:

    • present documents or other materials;

    • provide oral statements or written answers to investigators.

  • Appoint expert witnesses and request them to give their opinions.

The KFTC investigators can:

  • Enter the offices or other business places of suspected violators to examine books and records and other materials belonging to the suspected violators.

  • Seize any documents or materials produced.

Any company that obstructs the KFTC investigation or refuses to comply with any of its requests mentioned above is subject to an administrative fine of up to KRW200 million while any individual that is involved in the obstruction or refusal to comply is subject to an administrative fine of up to KRW50 million.

In criminal investigations following a complaint from the KFTC (see Question 13), the prosecution has investigative powers, as in other criminal cases (such as arrest or search and seizure).

For complaints relating to criminal prosecution, the KFTC refers the suspected parties to the Prosecutor's Office.

Settlements

23. Can the regulator reach settlements with the parties without reaching an infringement decision? If so, what are the circumstances in which settlements can be reached and the applicable procedure?

There is no settlement system that allows the KFTC to close any case (without reaching an infringement decision) by accepting commitments offered by the suspected parties.

Penalties and enforcement

24. What are the regulator's enforcement powers in relation to a prohibited restrictive agreement or practice?

Orders

The KFTC can:

  • Order the parties to discontinue the practice.

  • Publicly announce that it has issued a corrective order.

  • Take any other actions required.

Fines

The KFTC imposes an administrative fine under which companies can be fined a sum not exceeding the equivalent of 10% of the turnover generated by the sale of relevant goods or services during the period of a violation. For criminal penalties, companies are subject to a criminal fine of up to KRW200 million.

Personal liability

Individuals can be subject to either:

  • Imprisonment of up to three years.

  • A criminal fine of up to KRW200 million.

Immunity/leniency

The KFTC has a programme for granting automatic immunity from all or part of the administrative fines. The reduction for a party to come forward and provide evidence of a cartel is as follows:

  • The first party is eligible for full immunity.

  • The second party is eligible for partial leniency (50% reduction in administrative fines).

Under the amnesty plus scheme, a party that does not qualify for full immunity but reports another cartel (unrelated to the initial cartel) is eligible for an additional less than 20%, 20%, 30%, 50% or 100% reduction in the administrative fines for participating in the initial reported cartel. A party that has coerced other firms to either join or remain in the cartel is excluded from such immunity.

The first party and the second party eligible for immunity are exempt from criminal prosecution.

Impact on agreements

Any contract that unreasonably restricts competition is null and void between the parties (Article 19(4), MRFTA). If the unlawful provisions can be separated from the legal part of the agreement, the agreement remains valid.

Third party damages claims and appeals

25. Can third parties claim damages for losses suffered as a result of a prohibited restrictive agreement or practice? If so, what special procedures or rules (if any) apply? Are class actions possible?

Third party damages

A person can claim damages in the district court for losses suffered from an agreement that unreasonably restricts competition, unless the defendants prove that the violation was neither intentional nor negligent. When the amount of damages is difficult to prove, the court can award an amount of damages on the basis of the overall evidence in the proceedings.

Special procedures/rules

There are no special procedures or rules for these claims for damages.

Class actions

No class actions are permitted for unlawful restrictive agreements or practices.

 
26. Is there a right of appeal against any decision of the regulator? If so, which decisions, to which body and within which time limits? Are rights of appeal available to third parties, or only to the parties to the agreement or practice?

The same rules apply as for mergers (see Question 10).

 

Monopolies and abuses of market power

Scope of rules

27. Are monopolies and abuses of market power regulated under administrative and/or criminal law? If so, what are the substantive provisions and regulatory authority?

Monopolies and abuse of market power are regulated under the MRFTA, which is enforced by the KFTC. The KFTC Guidelines for reviewing abuse of market dominance, adopted in 2000 and revised in 2002 and 2009:

  • Define the relevant market.

  • Determine whether an enterprise is in a dominant position.

  • Set out the specific factors to be taken into account for each type of abusive behaviour.

As for restrictive practices, the KFTC can seek criminal prosecution for abuses of market power (see Question 13).

 
28. How is dominance/market power determined?

Article 2 of the MRFTA defines a market dominant enterprise as a supplier or customer in a particular market that can determine, maintain or change the prices, quantity, quality or other terms and conditions of trade regarding commodities or services, individually or jointly with other enterprises.

When determining if an enterprise has a dominant position in a relevant market, a number of factors must be considered, including:

  • Market share.

  • Existence and extent of market barriers.

  • Relative size of its competitors.

 
29. Are there any broad categories of behaviour that may constitute abusive conduct?

There are six types of specified abusive behaviours (Article 3-2, MRFTA):

  • Price abuse (conduct unreasonably determining, maintaining or changing the price of commodities or services).

  • Output control (conduct unreasonably controlling the sale of commodities or provision of services).

  • Obstruction of business (conduct unreasonably interfering with the business activities of other enterprises).

  • Obstruction of new entry (conduct unreasonably obstructing the participation of new competitors).

  • Exclusion of competitors (conduct unreasonably excluding competitive enterprises).

  • Infringement of consumer interests (conduct that might considerably harm consumer interests).

Exemptions and exclusions

30. Are there any exemptions or exclusions?

For general exemptions, see Question 15.

In addition, enterprises with annual turnover or purchases of, within a relevant market, less than KRW4 billion, are excluded from the presumption of being a market dominant company (Article 4, MRFTA).

Notification

31. Is it necessary (or, if not necessary, possible/advisable) to notify the conduct to obtain clearance or (formal or informal) guidance from the regulator? If so, what is the applicable procedure?

Companies can ask for guidance from the KFTC as to whether an activity is an abuse of market dominance before the activity takes place (see Question 17, Informal guidance/opinion).

Investigations

32. What (if any) procedural differences are there between investigations into monopolies and abuses of market power and investigations into restrictive agreements and practices?

The KFTC's procedure for investigations, the rights of third parties, publicity and whether the KFTC can accept commitments are the same as those for restrictive agreements and practices (see Questions 18 to 21 and 23).

 
33. What are the regulator's powers of investigation?

Penalties and enforcement

34. What are the penalties for abuse of market power and what orders can the regulator make?

Orders

The KFTC can order the market dominant company to:

  • Reduce prices.

  • Discontinue the practice.

  • Publicly announce the fact that the company received a corrective order by the KFTC.

  • Take other actions needed for remedies.

Fines

Companies are subject to administrative fines in an amount not exceeding 3% 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.

Personal liability

Individuals can be subject to either:

  • Imprisonment of up to three years.

  • A criminal fine of up to KRW200 million.

Third party damages claims

35. Can third parties claim damages for losses suffered as a result of abuse of market power? If so, what special procedures or rules (if any) apply? Are class actions possible?
 

EU law

36. Are there any differences between the powers of the national regulatory authority(ies) and courts in relation to cases dealt with under Article 101 and/or Article 102 of the TFEU, and those dealt with only under national law?

Not applicable.

 

Joint ventures

37. How are joint ventures analysed under competition law?

The MRFTA treats joint ventures as business combinations that are subject to merger control (see Question 2). A party in the process of becoming the largest investor of a newly established company (or joint venture) must file a merger notification to the KFTC.

However, some joint ventures formed between competitors may be considered unlawful restrictive agreements or practices if the parties intend to carry out the main part of their business by establishing a joint venture (see Question 13).

 

Inter-agency co-operation

38. Does the regulatory authority in your jurisdiction co-operate with regulatory authorities in other jurisdictions in relation to infringements of competition law? If so, what is the legal basis for and extent of co-operation (in particular, in relation to the exchange of information)?

The KFTC co-operates with a number of foreign competition authorities either:

  • Through co-operation agreements (for example, with Australian, EU and Mexican authorities).

  • Without formal agreements (for example, with the US and Japanese authorities).

The KFTC can (Article 36-2, MRFTA):

  • Conclude co-operation agreements with foreign governments.

  • Provide assistance for enforcement activities of foreign competition authorities. This must not infringe South Korean national laws and important national interests.

  • Support a foreign government's law enforcement activities through reciprocity, even though it may not have signed any co-operation agreement with the foreign government.

The level of co-operation has been limited in the past. However, there has recently been growing co-operation with some countries, particularly in cartel enforcement. For example, the KFTC conducted co-ordinated dawn raids in the Air Cargo and LCD cartel investigations in 2006 as well as the suspected CRT cartel investigation in 2007 and the suspected Power Cable cartel investigation in 2009.

 

Proposals for reform

39. Are there any proposals for reform of competition law?

In July 2008, the Korean government proposed a revised bill of the MRFTA to introduce a consent order or settlement procedure for remedies on anti-competitive practices, which is still pending in the National Assembly and is connected to the ratification of the Korea-US Free Trade Agreement (which introduces the procedure). If the settlement procedure comes into effect, the KFTC will be able to close relevant cases (other than those involving cartels) without reaching an infringement decision by accepting commitments offered by the parties (see Question 8).

 

Online resources

Korea Fair Trade Commission (KFTC)

W www.ftc.go.kr

The KFTC has an official Korean-language website, which provides up-to-date information on the legislation, rules/guidelines, decisions, policies and organization of the KFTC and summary of relevant judgments by Korean courts.

W eng.ftc.go.kr

In addition, the KFTC has an official English-language website, which provides limited or summarized information on the legislation, rules/guidelines, decisions, policies and organization of the KFTC and summary of relevant judgments by Korean courts. Please note that such information is generally for guidance only and may be potentially out-of-date and limited in scope.



The regulatory authority

Korea Fair Trade Commission (KFTC)

Head. Dae-lae Noh (Chairman)

Contact details. 95 Dason-3ro
Sejong, Korea
339-730
South Korea
T +82 44 200 4318
F +82 44 200 4343
E ftchotline-1@korea.kr
W eng.ftc.go.kr

Outline structure. The KFTC employs more than 500 people. The KFTC consists of the following:

  • The Commission (the decision-making body). This consists of nine commissioners who deliberate and make decisions on competition and consumer protection issues.

  • A secretariat (the working body). This is directly involved in:

    • drafting and promoting competition policies;

    • investigating anti-trust issues and presenting them to the Commission; and

    • handling the issues in line with the Commission's decision.

Responsibilities. The KFTC has four main responsibilities:

  • Promoting competition.

  • Strengthening consumers' rights.

  • Creating a competitive environment for small- and medium-sized companies.

  • Restraining concentration of economic power.

The KFTC enforces nine laws including the MRFTA. It formulates and administers competition policies, and deliberates, decides and handles anti-trust cases.

Procedure for obtaining documents. Most of the KFTC's statutes, guidelines, policies, official decisions and other documents are available on its website. It is also possible to access some internal documents under the Public Information Disclosure Act of Korea. Request for such information can be made through the KFTC website.



Contributor profiles

Jae Young Kim

Yoon & Yang LLC

T +82 2 6003 7509
F +82 2 6003 7030
E jkim@yoonyang.com
W www.yoonyang.com

Qualified. South Korea, 1992; New York (USA), 2004

Areas of practice. Anti-trust and competition; M&A; general corporate; corporate restructuring; international contracts; foreign investment; licensing; financial regulation.

Recent transactions

  • Representing a leading multinational wireless telecommunications component company in the abuse of dominance investigation by the KFTC.
  • Representing a leading multinational CRT/TFT-LCD manufacturer in the international CRT and TFT-LCD cartel investigations by the KFTC.
  • Representing a leading multinational marine hose manufacturer in the international marine hose cartel investigation by the KFTC.
  • Representing a leading multinational air carrier in the international air cargo cartel investigation by the KFTC.
  • Representing a leading multinational chemical company in acquiring a competitor’s shares and related merger filing in Korea.

Languages. Korean, English

Professional associations/memberships. Lecturer, Korea Productivity Center, Antitrust Law; Awarded Commendation from the Chairman of the Korea Fair Trade Commission.

Publications

  • Cartels and Private Litigation, Korean Bar Association, 2012.

  • South Korea Chapter, PLC Cross-border Competition and Cartel Leniency Handbook (Co-author), 2008, 2009, 2010, 2011, 2012, 2013.

  • Commentary on the Case concerning Cartels by Four Toilet Tissue Manufacturers, the Korea Fair Trade Commission, 2011.

  • Commentary on the Case concerning Predatory Pricing by Hyundai Information Technology, the Korea Fair Trade Commission, 2011.

  • Cooperation Obligations of Leniency Applicants, the Korea Competition Forum, 2010.

  • Seoul High Court Rejects Multiple Regression Method in a Follow-on Cartel Damages Litigation (Co-author), International Law Office, 2010.

  • The Korea Fair Trade Commission Amends the Notification on Implementation of Leniency Program, International Law Office, 2009.

  • Consumer Complaints Management System, the Korea Fair Trade Commission (Co-author), 2005.

  • South Korea Streamlines REITs Act, Asialaw, 2004.

  • Korea Amended Securities and Exchange Act, Asialaw, 2004.

  • Economic Analysis on Antitrust Cases, Fair Competition, 2002.

  • Standard of Unreasonableness in International Contract Notice of Korea Fair Trade Commission, Law Research Institute at Seoul National University, 1996.

Paul S Rhee

Yoon & Yang LLC

T +82 2 6003 7532
F +82 2 6003 7033
E psrhee@yoonyang.com
W www.yoonyang.com

Qualified. Connecticut (USA), 1997; District of Columbia (USA), 1998

Areas of practice. Anti-trust and competition; M&A.

Recent transactions

  • Representing a leading multinational elevator manufacturer's Korean subsidiary in follow-on private anti-trust lawsuit filed by a major customer for damages incurred from a domestic elevator cartel.
  • Representing a leading multinational machine component manufacturer’s Korean subsidiary in a cartel investigation.
  • Representing a leading multinational IT company in an abuse of dominance investigation.
  • Representing a leading multinational aerospace company in a merger filing for establishing a joint venture with a competitor.

Languages. Korean, English

Professional associations/memberships. American Bar Association (Section of Antitrust Law); International Bar Association (Antitrust Committee); Connecticut Bar Association; District of Columbia Bar Association; American Chamber of Commerce in Korea.

Publications

  • South Korea Section, LexisNexis UK’s LexisPSL Practice Note on Competition (International Cartel Enforcement & Merger Control) (Co-author), 2012/2013.

  • South Korea Chapter, PLC Cross-border Competition and Cartel Leniency Handbook (Co-author), 2008, 2009, 2010, 2011, 2012, 2013.

  • South Korea Chapter, Global Legal Group’s International Comparative Legal Guide to: Cartels & Leniency (Co-author), 2010, 2011, 2012, 2013.

  • LexisNexis UK’s Doing Business in Korea (Co-author), 2013.


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