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Economic Law: Focusing on the Monopoly Regulation and Fair Trade Act

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Abstract

Norms of economic law are not so familiar in Anglo-American legal cultures. Presumably, the expression of “economic law” might have derived from the continental legalistic environment, in which the notion can be defined as all statutes legislated to form fair economic order. Generally, the contents, structures, and legislative status of economic law depend on the economic order or system of the country in which the law is legislated. For that reason, economic law in each country has its own uniqueness. So is Korean economic law. Korean economic law is based on its economic order upon the Korean Constitution.

Keywords

  • Fair Trade
  • Price Discrimination
  • Supreme Court Decision
  • Resale Price Maintenance
  • Free Competition

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Notes

  1. 1.

    “The property right of all citizens must be guaranteed. The contents and limitations thereof shall be determined by Act”.

  2. 2.

    “The economic order of the Republic of Korea shall be based on respect for the freedom and creative imitativeness of enterprises and individuals in economic affairs”.

  3. 3.

    Act No. 3320. The Act was legislated on December 31, 1980 and came into force on April 1, 1981.

  4. 4.

    Supreme Court Decision 2004Du11275, March 24, 2006.

  5. 5.

    A firm with any of the following market shares in a particular business area (excluding an enterprise whose annual sales and/or purchases in a regular field of trade amount to less than KRW4 billion) shall be presumed to be a market-dominant firm:

    1. The market share of one enterprise is 50/100 or more.

    2. The total market share of three or less enterprises is 75/100 or more, excluding those whose market share is less than 10/100.

  6. 6.

    As is well known, Article 2 of the Sherman Act prohibits monopolization itself, instead of regulating abusive behavior from a market-dominant position.

  7. 7.

    Supreme Court en banc Decision 2002Du8626, November 22, 2007 < Case concerning POSCO’s Refusal to Supply Hot Rolled Steel Coils>.

  8. 8.

    The justification under the Act follows the horizontal merger guideline of the US DOJ.

  9. 9.

    Article 7 (4) raises the presumption that competition is substantially restrained in a particular business area in cases:

    1. 1.

      where the aggregate of the market share of a company taking part in a combination of enterprises (referring to the aggregate of market shares of the affiliated companies; the same shall apply herein) falls under any of the following categories:

      1. A.

        The aggregate market share of the company concerned satisfies the presumptive requirements for a market-dominant enterprise.

      2. B.

        The aggregate market share of the company concerned is the largest in the relevant business area.

      3. C.

        The aggregate market share of the company concerned exceeds the market share of the company with the second largest market share (referring to a company with the largest market share besides the company concerned) by not less than 25 % of the aggregate market share.

    2. 2.

      where a large company combines enterprises directly or through a person with special interest in accordance with the following requirements:

      1. A.

        A combination of enterprises in a particular business area where small or medium-sized companies covered by the Framework Act on Small and Medium Enterprises account for not less than two-thirds of the entire market share.

      2. B.

        A combination of enterprises wherein the combined company has a market share of not less than 5 %.

  10. 10.

    Supreme Court Decision 2002Du12052, January 28, 2005.

  11. 11.

    The number of such cases from 1981 through 2010 is over 8,000. KFTC (2011), p.59.

  12. 12.

    Supreme Court Decision 2004Du4703, December 7, 2006.

  13. 13.

    Supreme Court Decision 2000Du833, December 11, 2001.

  14. 14.

    This act is treated like ‘predatory pricing’, but requirements for illegality of an unfair bargaining are different from those of predatory pricing in U.S. Supreme Court decisions in that the former doesn’t ask to show the probability of recoupment. But the Korean Supreme Court decision regarding the requirement seems not to be clear. See Supreme Court Decision 99Du4688 delivered on June 12, 2001; Shin (2004).

  15. 15.

    Supreme Court Decision 99Du4686, June 12, 2001.

  16. 16.

    Supreme Court Decision 2007Du20812, October 29, 2009.

  17. 17.

    Supreme Court Decision 97Nu19427, June 9, 2000.

  18. 18.

    Supreme Court Decision 2000Du833, December 11, 2001.

  19. 19.

    Supreme Court Decision 2001Du175, June 15, 2001 [Revocation of a Corrective Order, etc.].

  20. 20.

    Supreme Court Decision 2009Du9543, November 25, 2010; Supreme Court Decision 2010Du9976, March, 10, 2011.

  21. 21.

    See id. at 192.

  22. 22.

    See, Jwa and Lee (2004), and Song (2002). Suffice it to say that arguments have already arisen within legal academia that shareholders have been given too much power vis-a-vis directors. See, e.g., Park and Lee (2003).

  23. 23.

    For example, control of the Samsung Group is channeled through Samsung Everland, a privately-held firm controlled by the son of the group’s chairman.

  24. 24.

    Sung-Hee Jwa, In-Kwon Lee, id, at 10–11.

  25. 25.

    The Fair Trade Commission carries out its function as one of the central administrative organizations pursuant to Article 2 (Establishment and Structures of the Central Administrative Organization) of the Government Organization Act. <Amended on August 3, 2007>

  26. 26.

    Supreme Court Full Bench Decision 2001Du5347, February 20, 2003.

  27. 27.

    Supreme Court Decision 2001Du10387, January 10, 2003.

  28. 28.

    In case mediation is realized, an agreement shall be deemed to have been reached as in the mediation protocol signed by the subjects of conflict and participating committee members.

References

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Shin, Y. (2013). Economic Law: Focusing on the Monopoly Regulation and Fair Trade Act. In: Introduction to Korean Law. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-31689-0_7

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