CONTENTS
- 1. Fair Trade Commission Investigation: the Client Who Requested Assistance
- - The Detailed Background of the Case
- 2. Fair Trade Commission Investigation: the Response Strategy
- - Demonstrating the Legitimacy of the Technical and Quality Standards
- - Denying Any Intent to Restrict Market Competition
- - Responding to the Fair Trade Commission's Inquiries and Submitting a Written Response
- 3. Result of the Fair Trade Commission Investigation: “No Charge”
- 4. Fair Trade Commission Investigation: How a Company Should Respond
- - Abuse of a Market-Dominant Position: Corrective Measures and Penalty Surcharges
- - If You Are Facing an Investigation?
1. Fair Trade Commission Investigation: the Client Who Requested Assistance
The client, who came to face a Fair Trade Commission investigation, was reported by a competitor on the ground that, in the course of strengthening its internal certification standards to secure product quality and safety, certain restrictions on the use of components had arisen.
Judging that it was necessary to clearly explain its intent and the facts, the client requested the assistance of a corporate-law specialist attorney with extensive experience in Fair Trade Commission investigations.
The Detailed Background of the Case
The client in this case was a domestic manufacturing company that had produced and supplied electronic components over a long period.
The client had strengthened its internal certification standards to secure the quality and stability of its products.
In this process, as restrictions arose on the use of certain components, a competitor filed a report, claiming it was a “measure to block market entry.”
At the initial stage, the Fair Trade Commission commenced an investigation, examining both whether the measure was based on technical and safety standards and whether there was a purpose of excluding the competitor.
Judging that a mere technical explanation would not be enough to clarify its intent, the client requested the assistance of a corporate-law specialist attorney with experience in Fair Trade Commission investigations.
2. Fair Trade Commission Investigation: the Response Strategy
The key issues in this case were as follows.
▶ Issues in the Case
ㅤ Whether the policy restricting the use of components operated unfavorably toward a particular competitor
ㅤ Whether the measure actually affected market competition
Centering on the above issues, the corporate-law specialist attorney focused on simultaneously securing technical and legal grounds and, through objective materials, on demonstrating that there had been no intent to restrict competition.
Through this, the attorney emphasized in the Fair Trade Commission investigation that the client's policy was a legitimate technical act.
Demonstrating the Legitimacy of the Technical and Quality Standards
The attorney built the argument on the premise that the client company's internal standards were not intended to exclude a particular competitor, but were aimed at securing quality and safety.
In addition, the attorney presented the objective grounds for the establishment of the standards through technical materials, certification procedures, and minutes of decision-making meetings.
Through this, the attorney emphasized that the measure was not an act restricting competition, but a legitimate technical decision.
Denying Any Intent to Restrict Market Competition
The attorney made clear that the standards at issue were not aimed at a particular competitor, but were an operating principle applied equally to all partner companies.
By presenting the existence of alternative suppliers and prior transaction examples, the attorney supported the conclusion that there had been no intent to exclude, and emphasized that the matter should be judged by reference to the standard of the overall market structure rather than intent.
Responding to the Fair Trade Commission's Inquiries and Submitting a Written Response
The attorney divided the Fair Trade Commission's inquiries into technical issues and legal issues, and prepared a structured written response.
In addition, by cooperating with the technical and quality-management departments and presenting materials centered on figures and facts, the attorney minimized the possibility of misunderstanding.
By adding comparison tables and reference materials, the attorney emphasized that the company's decision-making process had been transparent and reasonable.
3. Result of the Fair Trade Commission Investigation: “No Charge”
The Fair Trade Commission concluded its investigation with a finding of no charge, recognizing that the measure was difficult to regard as a deliberate act aimed at excluding a particular competitor and that it had been a technical measure based on internal quality standards.
As a result, the client was able to conclude the case without any separate sanction such as an unnecessary corrective order or penalty surcharge.
4. Fair Trade Commission Investigation: How a Company Should Respond
An investigation by the Fair Trade Commission goes beyond simple fact-finding, and evaluates from multiple angles the company's intent, its market impact, and even its internal standards.
Therefore, for a company that has come to face a Fair Trade Commission investigation, a strategic response from the early stage of the case is important.
1. Organizing the Facts at an Early Stage
2. Demonstrating the Technical and Policy Purpose
3. Preparing Responses Tailored to the Legal Issues
Abuse of a Market-Dominant Position: Corrective Measures and Penalty Surcharges
The Monopoly Regulation and Fair Trade Act strictly regulates acts by a company that holds a superior position in the market and harms the competitive order, and specifies the following acts as acts of abuse of a market-dominant position.
▶ Types of Abuse of a Market-Dominant Position
1. Price Restriction
The act of unfairly determining, maintaining, or changing the price of goods or the consideration for their use
2. Restriction of Transactions
The act of unfairly adjusting or restricting the sale of goods or the provision of services
3. Interference With Competitors' Activities
The act of unfairly impeding the business activities of another enterprise
4. Interference With New Entrants
The act of unfairly blocking the market entry of a new competitor by using technology, certification, access rights, and the like
5. Exclusion of Competitors and Infringement of Consumer Interests
Acts that drive competitors out of the market or risk infringing consumers' freedom of choice
Where such an act of abuse of a market-dominant position is found, the Fair Trade Commission may order the following corrective measures.
▷ Order to Cease the Abusive Act
Immediate cessation of the act at issue and prohibition of the same act in the future
▷ Order to Correct Prices and Conditions
Adjustment of unfairly set prices or transaction conditions
▷ Publication of the Corrective Order
Disclosing the fact of the corrective measure externally to inform the market
In addition, a company may be subject to a penalty surcharge of up to 6% of its sales, and where it is difficult to calculate sales, a penalty surcharge of up to 2 billion won may be imposed.
If You Are Facing an Investigation?
A Fair Trade Commission investigation comprehensively evaluates not only a company's technical measures and internal policies, but also its intent and its market impact.
In this process, where the facts are complex or the materials are extensive, mere self-handling alone may give rise to misunderstanding.
Therefore, the systematic organization of materials and legal judgment must proceed together from the early stage of the investigation, and securing an assistance system with the requisite expertise is the key to a strategic response.
On the basis of the experience and expertise accumulated through handling fair-trade cases over many years, our firm forms a task-force team to assist clients.
We organize the facts and internal materials from the early stage of the investigation, prevent in advance the legal risks that may arise during the investigation, and, where necessary, comprehensively support the client by preparing written opinions and statements.
If you are facing a Fair Trade Commission investigation and need legal help, please feel free to request assistance at any time through 🔗Legal Consultation Booking.
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