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Newsletter | July 2016, Issue 2
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Antitrust & Competition
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KFTC Clears Oracle of All Anticompetitive and Unfair Business Practice Allegations
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On April 12, 2016, the Korea Fair Trade Commission (“KFTC”), found that Oracle Korea (“Oracle”) did not violate Korea’s main competition statute, the Monopoly Regulation and Fair Trade Law (“FTL”).
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Kim & Chang represented Oracle throughout the entire course of the investigation, and during the two oral hearing sessions held by the KFTC.
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The KFTC investigated Oracle for allegedly abusing its market dominance and committed “unfair trade practices” with respect to its Data Base Management System (“DBMS”) services and software licenses by allegedly committing the following acts:
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Tying
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Oracle was alleged to have unlawfully tied its DBMS maintenance services with DBMS upgrades. To demonstrate an illegal tying arrangement, the KFTC must first show that the products were “separate.”
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The KFTC attempted to do this by asserting that DBMS maintenance services are not in the same relevant product market where DBMS upgrades belong.
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However, at the KFTC hearing, Kim & Chang established that: (1) there were no separate products, because the relevant market should be defined as the “DBMS system” market (which includes DBMS software, maintenance services and upgrades); and (2) Oracle’s sales policy did not restrain competition, since it did not lead to increased prices or shutting out Oracle’s competitors from the market.
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Coerced Purchases
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Oracle was alleged to have unlawfully coerced DBMS customers to purchase unnecessary maintenance services for all DBMS software licenses.
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At the KFTC hearing, Kim & Chang successfully established that there was no illegal coercion, because: (1) Oracle’s service requirement policy had a legitimate and valid purpose to protect its intellectual property rights and prevent unauthorized use; (2) customers were made aware of the policy since it was included in the license agreement into which they entered; (3) they were free to choose an alternative maintenance services other than that of Oracle; and (4) there was no competitive harm attributable to the policy.
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As a total clearing of all allegations in a market dominance case is unusual, Kim & Chang’s ability to secure a clearance for Oracle of all allegations from the KFTC was a notable achievement, and demonstrates excellence in terms of legal, economic, and technical expertise.
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