Private antitrust litigation in South Korea: overview

A Q&A guide to private antitrust litigation in South Korea.

The Q&A provides a high level overview of the legal basis for bringing private antitrust litigation actions; parties to an action; limitation periods and forum; standard of proof and liability; costs and timing; pre-trial applications and hearings; alternative dispute resolution; settlement or discontinuance of an action; proceedings at trial; available defences; available remedies; appeals and proposed legislative reform.

This Q&A is part of the Private Antitrust Litigation Global Guide.

The private antitrust litigation global guide serves as a single, essential, starting point of practical reference for both clients and practitioners in considering the various merits of commencing, defending or settling antitrust claims.

Contents

Legal basis for bringing private antitrust litigation actions

1. Can stand-alone and/or follow-on actions be brought in the context of private antitrust litigation? If so, what is the legal basis for bringing such actions?

Stand-alone actions

Stand-alone actions are possible, but are very uncommon. This is because it is difficult for a claimant in a stand-alone action to satisfy the requirement of proving the antitrust violation by the defendant.

Stand-alone actions are available for any types of antitrust violation, including both unlawful unilateral and multilateral conducts.

Even if a judgment or decision by the Korea Fair Trade Commission (KFTC) or a court is not final and is pending appeal, it can still form the basis for an action as a strong evidence to show that the defendant committed a wrongdoing in violation of the antitrust laws.

Legislative. The legal basis for stand-alone actions consists of:

  • Article 56 of the Monopoly Regulation and Fair Trade Act (MRFTA), the competition law.

  • Article 750 of the Korean Civil Code.

Adversarial or inquisitorial. Stand-alone actions are adversarial.

Follow-on actions

Any person who suffered from a harm caused by an antitrust violation can bring a follow-on damages suit against wrongdoer(s) in reliance on the KFTC's finding of a violation of Article 56 of the MRFTA and/or Article 750 of the Korean Civil Code.

Follow-on actions are available for any types of antitrust violation, including both unlawful unilateral and multilateral conducts.

Even if the decision by the KFTC or a court is not final and is pending appeal, it can still form the basis for an action as a strong evidence to show that the defendant committed a wrongdoing in violation of the antitrust laws.

Legislative. The legal basis for bringing follow-on actions is Article 56 of the MRFTA and/or Article 750 of the Korean Civil Code.

Adversarial or inquisitorial. Follow-on actions are adversarial.

 

Parties to an action

2. What must be demonstrated to commence an action?

Stand-alone actions

As in a general tort claim, under Article 750 of Korean Civil Code, to make a prima facie case the claimant(s) must prove:

  • Duty.

  • Breach of duty.

  • Intent or negligence of infringer.

  • Causation.

  • Amount of injury (or damages).

If a claim is made under Article 56 of the MRFTA, the claimants must prove only a breach of the MRFTA, causation and damages to make a prima facie case. There is a rebuttable presumption of the infringer's intent or negligence.

Any person who is injured by violation of the MRTFA has standing to bring an action.

Third parties can bring actions if they have suffered from an injury caused by an antitrust violation. Both direct and indirect purchasers can bring damage actions.

A co-conspirator cannot generally bring an action against other co-conspirators as it will not have suffered damages caused by the other co-conspirators' antitrust violation.

Follow-on actions

The requirements for follow-on actions are the same as in stand-alone actions. The major difference is that, in a follow-on action, the claimant must only show causation and damages, as the KFTC would have already found an infringement of MRFTA by the defendant.

Any person who has suffered damages has standing to bring an action against the person found to have violated the MRFTA.

Third parties can bring actions if they suffered from an injury caused by an antitrust violation. Both direct and indirect purchasers can bring actions for damages.

Generally, a co-conspirator cannot bring an action against other co-conspirators as it will not have suffered damages caused by the other co-conspirators' antitrust violation.

 
3. Is it possible to bring actions on behalf of multiple claimants (for example, collective actions)?

Stand-alone actions

J Collective actions are available under the Korean Civil Procedure Act in relation to MRFTA violations. If multiple claimants appoint one or more representatives among themselves, the representatives have the right to bring actions on behalf of the entire claimants (Article 53(1) , Korean Civil Procedure Act).

Opt-in or opt-out. Collective actions are opt-in.

Certification. The court will dismiss the case if it finds that the representative does not have a common interest in the cause of action.

Follow-on actions

Multiple claimants. It is possible to bring actions on behalf of multiple claimants (Article 53(1), Korean Civil Procedure Act).

Opt-in or opt-out. Collective actions are opt-in.

Certification. The court will dismiss the case if it finds that the representative does not have a common interest in the cause of action.

 
4. On what basis will a court or tribunal assume jurisdiction with respect to a claim?

Stand-alone actions

Claimants must bring stand-alone actions against corporate entities with the court that governs the domicile of the defendant's main business or office (Article 5(2), Korean Civil Procedure Act).

The principles of private international law apply, meaning that a territorial nexus to South Korea is necessary. The South Korean courts will exercise their jurisdiction if the harmful event occurred or the damage was suffered in South Korea.

Follow-on actions

Claimants must bring follow-on actions against corporate entities with the court that governs the domicile of the defendant's main business or office (Article 5(2), Korean Civil Procedure Act).

The principles of private international law apply, meaning that a territorial nexus to South Korea is necessary. The South Korean courts will exercise their jurisdiction if the harmful event occurred or the damage was suffered in South Korea.

 
5. Can actions be brought against individuals (such as, directors of corporate entities), whether domiciled within, or outside of, the jurisdiction?

Stand-alone actions

Although private antitrust actions can be brought against individuals, this is not common. No case has yet been reported where consumers have filed a damages suit against an individual.

Follow-on actions

See above, Stand-alone actions.

There was a case where shareholders of a company brought a derivative action where the shareholders sought to hold the directors of the company accountable for damages caused to the company by antitrust violations such as payments of monetary surcharges. However, no case has yet been reported where consumers have filed a damages suit against an individual.

 

Limitation periods and forum

6. What are the relevant limitation periods for stand-alone and/or follow-on actions? When do these start to run? Can these be extended?

Stand-alone actions

The applicable law is Article 766 of the Korean Civil Code.

The limitation period is the earliest of either:

  • Three years from the date when the claimant knew or should have reasonably known of the damages and the identity of the infringer.

  • Ten years from the date when the violation occurred.

The limitation periods cannot be extended. The limitations periods stop running if (Article 168, Korean Civil Code):

  • A claim is raised.

  • An attachment or preliminary injunction is rendered.

  • The defendant agrees.

Follow-on actions

See above, Stand-alone actions.

 
7. Where can an action be commenced? Are there specific courts or tribunals before which stand-alone and/or follow-on actions may be brought?

Stand-alone actions

A suit must commence before a district court in whose jurisdiction either:

  • The defendant is domiciled.

  • A harmful event occurred.

  • The damage was suffered.

Follow-on actions

See above, Stand-alone actions.

 
8. Where actions can be brought before different courts and tribunals, what are the comparative advantages and disadvantages of bringing actions in each forum?

Stand-alone actions

Damage actions must be brought before a district court, with no exceptions. No different court or forum is available for the purpose of stand-alone actions seeking damages.

Follow-on actions

See above, Stand-alone actions.

 

Standard of proof and liability

9. What is the standard of proof?

Standard of proof

The standard of proof for a damages claim is the preponderance of evidence.

Burden of proof

The claimant seeking damages bears the burden of proof and must prove duty, breach of duty, causation and damages.

Rebuttable presumptions

There is a rebuttable presumption that the defendant intentionally or negligently engaged in an MRFTA violation, once the violation is established (Article 56, MRFTA). That is, the defendant bears the burden of proof in establishing that its violation of the MRFTA was not intentional or negligent.

 
10. Is liability on a joint and several basis?

Multiple defendants who are found to have violated the MRFTA bear joint and several liabilities for damages suffered by the claimant(s).

The court apportions liability among jointly liable parties based on the proportion of harm caused by each defendant to the claimant. In the context of a cartel, this is usually based on the amount of each defendant's relevant turnover.

Umbrella pricing claims have been raised a few times before the courts, but there is only one lower court case where the umbrella pricing claims were accepted (which is currently pending appeal).

A defendant that has paid more than it is liable for can commence a contribution claim against other defendants.

Contribution claims are often brought in cases where the damages amount was not properly allocated among defendants. They are usually brought after resolution of the main claim, after the damages amount is determined.

The limitation period for contribution claims is ten years, which begins to run when the defendant makes the excessive payment.

 

Costs and timing

11. What are the recent trends in relation to the costs of bringing an action before the relevant courts / tribunals?

Stand-alone actions

There is no particular trend in relation to the costs for private antitrust claims.

Follow-on actions

See above, Stand-alone actions.

 
12. What is the applicable principle regarding the apportionment of the costs of the action? Is there a "loser pays" approach to costs?

Stand-alone actions

The loser-pays rule applies. However, guidelines issued by the South Korean Supreme Court set out a formula for calculating litigation costs, including attorney's fees, under which the actual amount of the litigation cost is not fully paid back in most cases.

Follow-on actions

See above, Stand-alone actions.

 
13. Can parties insure against costs risk associated with an action?

Stand-alone actions

No such insurance is available in South Korea.

Follow-on actions

See above, Stand-alone actions.

 
14. Can a third party fund the costs of bringing an action?

Stand-alone actions

A third party is not prohibited from funding the costs of an action, but this is not common. The KFTC is considering setting up a fund programme to encourage injured consumers or consumer activist groups to bring damages suits against parties who are found to have engaged in antitrust violations.

Follow-on actions

See above, Stand-alone actions.

 
15. Can claimants assign their claim to a third party funder?

In principle, an assignment of damages claims is illegal (Article 6, Trust Act). The Trust Act provides that any trust with the main purpose of having the trustee proceed with litigation is null and void.

 
16. Can parties engage legal representation under either a "conditional" fee arrangement, or a "damages-based" fee arrangement?

Stand-alone actions

A conditional or damages-based fee arrangement can be entered into. Conditional fee arrangements are often made, particularly in small claim cases.

Follow-on actions

See above, Stand-alone actions.

 
17. If it possible for a defendant to a claim to bring an application for security for costs?

It is not possible for a defendant to apply for security for costs.

 
18. What is the current trend, if any, regarding the period of time from commencing an action to a subsequent first instance judgment by a competent body?

Stand-alone actions

The period of time required varies greatly depending on the particular case. Stand-alone actions are not common enough in South Korea to establish a trend.

Follow-on actions

The period of time varies greatly depending on the particular case. It usually takes more than three to four years to obtain the first instance judgment because it generally takes a long time to assess the actual amount of damages.

 

Pre-trial applications and hearings

19. Where statements of case are lodged with the relevant court or tribunal, can third parties seek to obtain copies?

Stand-alone actions

Third parties can only obtain copies of litigation documents if they apply to the court to obtain the documents for the purposes of other litigation in which the third parties are involved.

Follow-on actions

See above, Stand-alone actions.

 
20. Can a claimant seek interim measures?

Stand-alone actions

While it is theoretically possible to obtain injunctive relief in relation to an alleged antitrust infringement before a full trial, no case has been reported in which this has been done as yet.

Injunctive relief can be granted in case where substantial or immediate harm will occur to the claimant(s) in the absence of an injunction. Simple monetary damages do not qualify as substantial or immediate harm.

It is possible to obtain interim relief where harm is threatened, but not yet manifest, in an immediate harm situation.

There are no relevant cases showing a trend in this regard.

Follow-on actions

See above, Stand-alone actions.

 
21. Can a defendant seek to dispose of all or part of the action prior to a full trial?

There is no mechanism to dispose of (part of) the action before trial. The Korean Civil Procedure Act does not distinguish "prior to a full trial" from "in a full trial" in terms of procedure.

Summary judgments are not available under the Korean Civil Procedure Act.

 
22. Can a defendant seek to stay an action (for example, pending the outcome of an investigation by a competent competition authority, or an appeal)?

Staying a claim

A court can grant a stay on the motion of a party to the case, or at its own discretion without the request of a party if there is an ongoing investigation by the KFTC into the same alleged infringement.

A defendant can have proceedings stayed pending the outcome of an appeal against the KFTC's decision by showing that it has fair chance to win the appeal case.

A court usually grants a stay until the KFTC's investigation is over or until the final decision (the Supreme Court decision) on appeal on the KFTC's decision is released.

A defendant often requests the court to stay proceedings until the final decision (or the damages assessment) of a damages case is rendered on the same alleged infringement where it is a defendant.

 
23. Can a party seek to have a specific issue (such as limitation) tried as a preliminary issue in advance of a full trial?

A specific issue cannot be separately tried. All relevant issues must be tried in the full trial. The Korean Civil Procedure Act provides for interlocutory decisions where certain issues can be tried during the course of a legal action, but interlocutory decisions are only very rarely used.

 

Evidence and legal privilege

24. Are existing findings of fact and/or infringement in a decision or judgment of a competent authority or body binding in the context of an action?

Competition authority decisions

In both stand-alone and follow-on actions, the KFTC's ruling or finding does not bind the courts. The courts independently review the issues, but mostly respect the KFTC's rulings and findings.

Judgments

Unless other evidence is found, the courts tend to follow other courts' findings of fact and of infringement in relation to stand-alone and follow-on actions.

 
25. What is the evidential status of findings of fact and/or infringement in a decision or judgment of a body in a third country?

While a decision or judgment of a foreign country is not binding, in practice, the courts may refer to findings of fact and/or violation made in a foreign country.

 
26. If discovery is available, what is the general procedure for discovery, and what documents would need to be disclosed?

Discovery is not available under the Korean Civil Procedure Act.

Although there is no discovery in South Korean civil procedure, the court can ask the KFTC to produce all the records of a particular case (Article 56(2), MRFTA). Therefore, the KFTC may have to turn over all records to the court, including those submitted by a leniency applicant, and copies of confidential versions of KFTC decisions.

The court can, on a party's motion or on its own discretion, request the KFTC to produce certain documents under the usual court procedure to obtain documents or materials.

 
27. Can a party oppose the provision of any documents not in their possession or control?

There is no procedural rule allowing a party to oppose the provision of documents not in their possession or control. However, when a party asks the court to order the other party's production of documents, the other party can submit its opinion opposing that production to the court.

 
28. Can parties rely on legal privilege to withhold documents from inspection?

The concept of attorney-client privilege does not exist in South Korea. However, civil or criminal witnesses can refuse to testify in relation to professional secrets (Article 315, Korean Civil Procedure Act; Article 149, Korean Criminal Procedure Act).

 

Alternative dispute resolution

29. Can the parties seek to resolve the action through alternative dispute resolution?

The parties can agree to resolve an action through alternative dispute resolution (ADR).

There is no requirement to engage in ADR before trial and no particular implications for refusing to engage in ADR.

There are no particular tactical advantages or disadvantages associated with engaging in ADR.

 

Settlement or discontinuance of an action

30. What are the tactical advantages and disadvantages associated with making an offer of settlement?

Stand-alone actions

Advantages. As the claimant in stand-alone actions often has difficulty in obtaining sufficient evidence to prove the wrongdoing, the claimant can offer a settlement to a particular defendant on condition that the defendant co-operates with the claimant in obtaining evidence to pursue other defendants.

Disadvantages. There are no specific disadvantages.

Follow-on actions

Advantages. The claimant may save costs and time.

Disadvantages. There are no specific disadvantages.

 
31. Is permission required from the relevant court or tribunal to settle any action prior to or during trial?

Judicial permission is not required for settlement.

In most cases, the parties will incur fewer costs if they settle. In most settlement cases, each party is responsible for its own litigation costs.

If there is a settlement between parties, the action is closed and the court cannot make any order after the settlement.

This also applies to collective actions. If not all parties agree to the settlement, the action continues for the disagreeing parties.

 

Proceedings at trial

32. Are actions heard by a jury?

Actions under the Korean Civil Procedure Act are not heard by a jury.

 
33. How is confidential information protected during the course of proceedings?

A court often grants orders to restrict confidential information to the minimum number of persons, to the extent possible. Confidential information may also be redacted from the written ruling.

A court can hold a hearing in private chambers or exclude the public from the courtroom. If so, materials reviewed in the non-public hearing are returned to the owner.

 
34. What evidence is admissible?

Evidence from criminal proceedings is admissible in a private antitrust action.

Witness evidence is admissible. The court can issue a subpoena that requires a witness to appear before the court for testimony. A trial witness is subject to cross-examination at trial. If a witness fails to comply with the court's order to appear, he can be subject to civil penalties such as administrative fines and/or imprisonment.

Expert witness evidence is admissible and is subject to cross-examination.

 

Available defences

35. Is a "passing-on" defence available?

The South Korean Supreme Court recognised the passing-on defence in 2012 (2012. 11. 29. 2010Da93790). According to this Supreme Court decision, a party seeking to use the passing-on defence in a cartel context must prove a causal link between the price inflation due to the defendant's collusive action and the price increase of the purchaser's (claimant's) goods.

The passing-on defence has been successful in previous actions where the defendant could show the actual amount of passing-on.

 
36. Are any other defences available?

No other specific defence has been recognised for antitrust violations in South Korea.

 

Available remedies

37. Are damages available, and if so, on what basis are damages awarded?

Damages

Damages are available. The basis is the claimant's loss, which is usually equal to any supra-competitive profits made by the defendants for the duration of the anti-competitive conduct.

Factors such as prior financial penalties or participation in voluntary redress schemes are not taken into account.

In private actions for antitrust violations, compensatory damages equal to the defendant's supra-competitive profits for the duration of the violation are usually granted.

Restitution or disgorgement measured according to the defendant's gain rather than the claimant's loss is not available.

Exemplary damages are not available under the MRFTA or Korean Civil Code.

Interest

Interest is available on damages awarded if the claimant prevails. 5% interest accrues from the date when infringement occurred to the date of court's ruling. 15% interest accrues from the date of court's ruling to the date of payment of damages by the defendant.

 
38. How are damages quantified?

It is common for expert witness economists to calculate the amount of damages.

The courts have not shown a preference for a specific form of economic analysis in quantifying damages and usually choose the most reasonably persuasive one. In some cases, the court appoints its own economic expert at both parties' cost to conduct an economic analysis for the court.

The courts have not shown a preference for witness evidence. Usually, the court-appointed expert witness's assessment is adopted.

 
39. Are any other remedies available?

Only damages are available in private actions.

 

Appeals

40. Is it possible to appeal the judgment of the relevant court or tribunal?

The district court is the court of first instance in private actions. The district court's ruling can be appealed before the High Court of Appeals and the Supreme Court, which is the final court of appeal.

The High Court of Appeals retries cases on issues of fact and/or law, whereas the Supreme Court retries cases only on issues of law.

 

Reforms

41. Are there any reforms proposed or due regarding the legal regime applicable to private antitrust actions?

Legislators and the KFTC continue to discuss adoption of class action procedures and punitive damages. Some related bills have been introduced, but not been enacted.

 

Online resources

Ministry of Government Legislation

W www.law.go.kr

Description. Provides up-to-date official legislation information. Includes both the Korean original legislation and its English translation.



Contributor details

Keumseok Oh, Partner

Bae, Kim & Lee LLC

T +82 2 3404 0148
F +82 2 3404 7688
E kmseok.oh@bkl.co.kr
W www.bkl.co.kr

Professional qualifications. Korean Bar (1989)

Areas of practice. Competition; litigation; corporate governance; tax

Non-professional qualifications. Seoul National University (LLB, 1987); Seoul National University, Graduate School of Law (LL.M., 1992); Columbia University, School of Law (Visiting Scholar, 2000-2001)

Recent transactions

  • Representing a Japanese electronics company seeking damages from Korean companies that were found to have engaged in price-fixing (2015).
  • Representing a European multi-national elevator manufacturer seeking contribution from Korean co-conspirators that had engaged in a price-fixing (2016).
  • Representing Korean companies seeking damages from domestic and foreign air cargo carriers that were found to have engaged in freight rate price-fixing (pending).
  • Representing a Korean electronics company seeking damages from Taiwanese electronics companies that were found to have engaged in a price-fixing (pending).
  • Managing global coordination of a petrochemical company's acquisition of two other petrochemical companies (ultimately cleared in Korea, China, Turkey and the US) (2016).
  • Representing a leading consumer electronics company in a case involving false and deceptive advertisement (charge was dropped) (2014).
  • Representing insurance companies on appeal challenging the KFTC's decision in relation to insurance premium rate fixing (the KFTC's decision was reversed) (2014).

Languages. English, Korean

Publications. Keumseok Oh, et al., Fair Transaction Act in Large distribution Industry: Cases and Theories (2012) [in Korean]

Sanghoon Shin, Senior Foreign Attorney

Bae, Kim & Lee LLC

T +82 2 3404 0230
F +82 2 3404 0006
E sanghoon.shin@bkl.co.kr
W www.bkl.co.kr

Professional qualifications. New York Bar (2005)

Areas of practice. Competition; corporate governance; consumer protection

Non-professional qualifications. Seoul National University (B.A. in Economics, 1997); Seoul National University, Graduate School of Administration (Policy Science Course completion, 1999); George Washington University Law School (J.D., 2004)

Recent transactions

  • Representing a Japanese electronics company seeking damages from Korean companies that were found to have engaged in price-fixing (2015).
  • Representing a European multi-national elevator manufacturer seeking contribution from Korean co-conspirators that had engaged in a price-fixing (2016).
  • Representing Korean companies seeking damages from domestic and foreign air cargo carriers that were found to have engaged in freight rate price-fixing (pending).
  • Representing a Korean electronics company seeking damages from Taiwanese electronics companies that were found to have engaged in a price-fixing (pending).
  • Managing global co-ordination of a petrochemical company's acquisition of two other petrochemical companies (ultimately cleared in Korea, China, Turkey and the US) (2016).
  • Representing a leading consumer electronics company in a case involving false and deceptive advertisement (charge was dropped) (2014).
  • Representing insurance companies on appeal challenging the KFTC's decision in relation to insurance premium rate fixing (the KFTC's decision was reversed) (2014).

Languages. English, Korean

Publications. Sanghoon Shin, A Case Study on Antitrust Filing and Review System on M&As in Various Jurisdictions (Korean Journal of International Trade and Business Law, Vol. 20 No. 2, Dec.2011) [in Korean].


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