Korea Fair Trade Commission

Ministerial-level central administrative organization under the
authority of the Prime Minister functions as a quasi-judiciary body.

Home POLICY AREA Competition policy Abuse of dominance

Abuse of dominance

Overview

What is a market-dominant entity?
  • In general, this term refers to a ‘monopolistic or oligopolistic business entity’, but not only a supplier (distributor), but also a consumer may serve as a market-dominant entity.
  • It is a business entity in a position to determine, maintain, or change, alone or jointly with other business entities, the price, quantity, quality, or other terms and conditions of transactions of a specific commodity or service (Subparagraph 7 of Article 2 of the Monopoly Regulation and Fair Trade Act).
Criteria for determination of market-dominant position
  • If a business entity’s market share is at least 50% or the aggregate of market shares of two or not more than three business entities is at least 75%, such business entities shall be deemed market-dominant entities (Article 4 of the Monopoly Regulation and Fair Trade Act).
    * Excluding business entities, the annual sales or purchase of which amount to less than four billion won.
  • However, a market-dominant entity shall be determined by comprehensively taking into consideration whether and to what extent a barrier to its entry into the market exists, the relative scale of competitors, etc. in addition to the criteria based on market share.
Types of abuse
  • The abusive practices are classified into five types: (1) Abusive pricing; (2) control of production output; (3) interference with business activities; (4) limiting market entry; and exclusion of competitors or hindrance to consumers’ interests (Subparagraph 7 of Article 2 of the Monopoly Regulation and Fair Trade Act).

Sanctions against offenses

Administrative sanctions (corrective measures and penalty surcharges)
  • Issuing an order to lower prices, proscribe relevant practices, publish the fact that the offender is ordered to take corrective measures, and take other measures necessary for rectification.
  • A penalty surcharge not exceeding 3% of sales may be imposed, but a penalty surcharge not exceeding one billion won may be imposed if no relevant sales have been made or it is impracticable to compute sales.
Penal Provisions
  • An offender accused by the Fair Trade Commission is punishable by imprisonment for not more than three years or by a fine not exceeding 200 million won.
  • An offender who breaches an order to take corrective measures is punishable by imprisonment for not more than two years or by a fine not exceeding 150 million won, irrespective of whether the offender is a legal entity or individual.
  • Liability for damages: The counter-party to a transaction, who sustains any loss inflicted by a market-dominant entity’s abuse, may file a civil claim with a court for damages.