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Newsletter | April 2015, Issue 1
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Antitrust & Competition
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Supreme Court affirms Seoul High Court’s decision in Naver’s administrative litigation against KFTC
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On November 13, 2014, the Korean Supreme Court affirmed the Seoul High Court’s decision that annulled the KFTC(Korea Fair Commission)’s corrective order and administrative fines imposed against Naver regarding Naver’s alleged abuse of dominance practices vis-à-vis online video contents providers.
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The KFTC had found that Naver unlawfully conditioned its agreements with online video contents providers to provide video index database services by including provisions that prohibit the online video contents providers from displaying advertisements on its video contents. Such practice, the KFTC found, violated Article 3-2 of the Monopoly Regulation and Fair Trade Law by forcing a transaction or act which is unjustly disadvantageous to a transaction counterparty.
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The Supreme Court’s decision is summarized in more detail below:
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Relevant Product Market
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The KFTC had defined the relevant product market as the market for ‘Internet Portal Service Users’ given that most internal portals provide similar services based on 1S – 4C (Search, Contents, Communication, Community and Commerce).
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The Supreme Court affirmed the Seoul High Court rejection of the KFTC’s product market definition on grounds that the business practice concerned implicates the brokerage market between online video content providers and users, and that the determination of whether Naver has a market dominant position should be assessed based on the relevant market defined as the brokerage market between Naver users and online contents providers.
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Conferring Disadvantages
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The Supreme Court also affirmed the Seoul High Court ruling that it is not sufficient to show that an undertaking has forced another to suffer disadvantages in order to find unlawfulness. Instead, to find unlawful conferring of disadvantages, one must show (i) an anticompetitive intent to undermine market competition; as well as (ii) an objective assessment that such practice had anticompetitive effects. In this case, although the online contents providers’ advertisement revenues may decrease as a result of Naver’s actions, the Seoul High Court had found that there was neither an anticompetitive intent nor any actual anticompetitive effects resulting from Naver’s practices.
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Kim & Chang represented Naver in this case.
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