CONTENTS
- 1. Violation of the Monopoly Regulation and Fair Trade Act, a Case Raising the Issue of Whether a Trade Practice Was Consistent With a Desirable Competitive Order
- - Litigation Over a Violation of the Monopoly Regulation and Fair Trade Act, the Lower Court's Determination
- 2. Litigation Over a Violation of the Monopoly Regulation and Fair Trade Act, the Supreme Court's Determination
- 3. Litigation Over a Violation of the Monopoly Regulation and Fair Trade Act, Daeryun's Strategy
1. Violation of the Monopoly Regulation and Fair Trade Act, a Case Raising the Issue of Whether a Trade Practice Was Consistent With a Desirable Competitive Order
This was a case in which, in litigation over a violation of the Monopoly Regulation and Fair Trade Act, the meaning of a “normal trade practice consistent with a desirable competitive order” was at issue as a premise for determining whether an abuse of a market-dominant position existed.
The plaintiffs are businesses that sell medical devices (CT and MRI machines), and they also provide maintenance services directly.
Independent service organizations (hereinafter “ISOs”) other than the plaintiffs provide maintenance services for the CT and MRI machines sold by the plaintiffs, and they therefore stand in a competitive relationship with the plaintiffs.
To perform maintenance services on a device sold by the plaintiffs, one must enter a service key, an encrypted value issued by the plaintiffs.
A problem arose because, when the plaintiffs issued the service key at issue upon an individual hospital's request, they checked whether that hospital dealt with a competing ISO and provided the service differently as a result.
This was because, even though the service key at issue was ordinarily provided free of charge, for a hospital that dealt with an ISO, the plaintiffs provided it for a fee of 1.54 million won, and they also issued it only after 20 to 25 days.
In response, the defendant and final appellant, the Fair Trade Commission, issued a corrective order and an order to pay a penalty surcharge against the plaintiffs, and the plaintiffs sought revocation of those orders against the defendant.
Litigation Over a Violation of the Monopoly Regulation and Fair Trade Act, the Lower Court's Determination
The lower court revoked the defendant's corrective order and order to pay a penalty surcharge, on grounds including that it was difficult to find that a practice of the plaintiffs providing the service key at issue free of charge actually existed.
2. Litigation Over a Violation of the Monopoly Regulation and Fair Trade Act, the Supreme Court's Determination
The Supreme Court's determination on the litigation over a violation of the Monopoly Regulation and Fair Trade Act is as follows.
The Supreme Court stated that, where the price of raw materials or the like set by a vertically integrated market-dominant business in the upstream market is set so high as to exclude from competition a competing business in the downstream market that operates as efficiently as that market-dominant business, or where that price has substantially blocked the possibility of new businesses entering the downstream market, the matter must be judged under the legal principle that such conduct constitutes an unfair condition without validity in light of a normal trade practice consistent with a desirable competitive order.
In setting out the above legal principle, the Supreme Court determined that the evidence was insufficient to prove that, in this litigation, there was no practice of providing the service key free of charge under the licensing policy, that the for-fee provision fell within the rights of the copyright holder of the service software, and that it produced effects of hindering competition by ISOs and creating a barrier to market entry for new maintenance businesses.
In other words, the Supreme Court found it difficult to regard the plaintiffs' conduct as an abuse of a market-dominant position, and it found that the conduct did not constitute an unfair discriminatory act either; accordingly, it accepted the lower judgment and dismissed the final appeal.
This means the court found that the corrective order and the penalty surcharge of 6.32 billion won, among other sanctions imposed by the Fair Trade Commission against the plaintiffs, were improper, and the plaintiffs prevailed in the revocation lawsuit.
3. Litigation Over a Violation of the Monopoly Regulation and Fair Trade Act, Daeryun's Strategy
In litigation over a violation of the Monopoly Regulation and Fair Trade Act, whether conduct constitutes a normal trade practice consistent with a desirable competitive order should be judged normatively, taking into account the legislative purpose of the former Monopoly Regulation and Fair Trade Act, which seeks to promote fair and free competition and thereby foster creative business activity.
An abuse of a market-dominant position is conduct prohibited under the Monopoly Regulation and Fair Trade Act, referring to conduct by which a business holding market power unfairly uses that power to restrict competition or to bring about effects unfavorable to consumers.
In assessing such conduct, the concept of a “normal trade practice consistent with a desirable competitive order” serves as a very important standard.
The Fair Trade Group of Daeryun Law Firm LLP is made up of members with experience at the Fair Trade Commission and as prosecutors in a dedicated fair trade division, and its 🔗attorneys experienced in Monopoly Regulation and Fair Trade Act matters analyze the legal issues of a case in detail, drawing on their experience with the Monopoly Regulation and Fair Trade Act and matters of abuse of a market-dominant position.
The group can also provide strategic advice and responses from the investigation stage before the Fair Trade Commission through the entire course of litigation, and it offers guidance on how a company may, after judgment, align its business practices with the Monopoly Regulation and Fair Trade Act.
