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Newsletter | December 2014, Issue 4
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Antitrust & Competition
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Supreme Court decision involving life insurance products discusses the requirements for finding collusion from information exchange
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On July 24, 2014, the Korean Supreme Court rendered decisions with significant implications for cartel enforcement regarding the exchange of information. The Supreme Court upheld the Seoul High Court decisions revoking the Korea Fair Trade Commission (“KFTC”)’s decision issuing corrective orders and imposing administrative fines against 16 life insurance companies on allegations of collusion. In its decision, the Supreme Court declared the requirements for determining whether an exchange of information may constitute an agreement to unfairly restrain competition.
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The KFTC’s decision had relied primarily on the exchange between the life insurance companies of information undisclosed to the market, such as expected future interest rates, as sufficient evidence of an agreement to collude on insurance interest rates. In upholding the lower court decision, the Supreme Court held that the existence of an agreement (whether explicit or implicit) among the cartel participants is essential to establishing unlawful collusion to unfairly restrain competition, and found that the KFTC failed to prove the existence of such agreement. According to the Supreme Court, the mere (i) appearance of an unlawful collusive act and (ii) the exchange of pricing information among competitors are insufficient to find that there was an ‘agreement’ to restrain competition.
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While the Supreme Court acknowledged that an exchange of information among competitors may be deemed as strong evidence to support the existence of collusion, the Court declined to infer an agreement despite evidence of possible information exchange given the existence of plausible alternative explanations for the parallel conduct. The Supreme Court held that the exchange of information should be evaluated based on the overall circumstances, including (i) purpose and intent of the information exchange, (ii) each company’s actual decision-making and the degree of parallelism after the information exchange, and (iii) the impact of the information exchange on the relevant market, in addition to the factors referenced by the KFTC such as the structure and nature of the relevant market, nature/content, timing and method of the information exchange, and persons involved in the information exchange.
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Kim & Chang represented a number of the aforementioned life insurance companies in all related appeals of the KFTC decision up to the Supreme Court.
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