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.
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.