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Newsletter | April, 2015 Issue 1
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ANTITRUST & COMPETITION
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Korea Fair Trade Commission Announces Comprehensive Enforcement Plan for 2015
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The Korea Fair Trade Commission (“KFTC”) announced its detailed enforcement plans for 2015 (the “Plan”) on February 1, 2015. Further details of the Plan are provided below.
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Improve creativity and innovation by promoting competition
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The Plan sets forth four strategies to promote fair competition: (i) stronger enforcement of abuse of dominance in the information and communications technology (ICT) sector; (ii) closer monitoring of anti-competitive collusion and M&As; (iii) eradication of unfair practices in the public sector and reform of regulations that restrict competition; and (iv) reform of the corporate governance structure of major conglomerates and closer monitoring of their internal transactions.
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Regarding enforcement in the ICT sector, the Plan states that the KFTC will engage in close monitoring of unfair trade practices by mobile SNS and OS developers and the influence such platform firms can have on neighboring markets (such as finance, services, and content provision). The Plan also states that the KFTC will engage in close monitoring of abuse of dominance in the software sector, such as illegal tie-in by dominant software developers and abuse of patent rights by the firms with control over standard technologies. Of particular note, the KFTC plans to form a Special Task Force on the ICT Sector in February, composed of ICT experts and seasoned investigators within the KFTC, and headed by the Secretary General of the KFTC.
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In reviewing mergers, the KFTC plans to encourage firms to file voluntary preliminary reviews and shorten the formal review period from 30 days to 15 days for mergers that do not raise anti-competitiveness concerns.
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Strengthen enforcement of competition law in the global market
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The KFTC plans to strengthen its monitoring of international cartels in sectors that are heavily reliant on imports, such as core components and materials for the automobile and electronics industries, and to increase cooperation with the US and EU competition authorities on possible manipulation of international benchmark prices for commodities, such as crude oil and crops. The KFTC will also be more aggressive in pursuing criminal prosecution of international cartels.
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The KFTC will also strengthen its review of major global mergers and acquisitions, especially in the intermediate goods markets related to the IT and electronics industries.
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Reform of unfair practices between large companies and SMEs
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The Plan highlights subcontracting, distribution and retail, and franchising as areas of particular concern in terms of unfair trade practices suffered by SMEs. In the subcontracting sector, the KFTC will focus in particular on ensuring the proper flow of payments to the lower-level subcontractors. In distribution and retail, the KFTC will form a joint task force with other governmental entities to rectify unfair trade practices in the home shopping channel sector and closely monitor the unfair trade practices by hypermarkets, department stores, and outlets. In franchising, the KFTC will closely monitor areas of frequent complaints by franchisees, such as passing-on of marketing and sales costs.
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Create a market environment friendly to consumers
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The KFTC aims to strengthen its overall focus on consumers by improving the coordination among various public agencies on consumer policies and addressing consumer harm. The Plan also addresses the increase in consumer complaints due to the rapid growth of direct overseas purchasing by individual consumers and the KFTC’s plans to strengthen international cooperation by joining in the UN Online Dispute Resolution discussion.
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