Recent Development of Competition Law and Policy of Korea

Transcription

1 Recent Development of Competition Law and Policy of Korea SUH DongWon Vice Chairman Korea Fair Trade Commission 0

2 Table of contents I. Introduction II. Recent Development of Competition Law and Policy of Korea 1. Improvement of Cartel Regulation 2. Improvement of Criteria for Merger Review 3. Policy for Consumer Empowerment 4. Introduction of Dispute Settlement System 5. Competition Advocacy III. Recent Cases 1. Output Control and Price-fixing Cartel by Sugar Manufacturers 2. Pharmaceutical Sector Investigation IV. Conclusion 1

3 I. Introduction China Enacted in ( )? 8 countries in East Asia enforcing competition law : Japan(47), Korea(81), Taiwan(92), Mongolia(93), Thailand(99), Indonesia(00), Singapore(05), Vietnam(05), China(08) 2

4 II. Competition law and policy 1. Improvement of Cartel 1 st leniency applicant : Full exemption 2nd leniency applicant : 30% reduction 1 st leniency applicant : Full exemption 2nd leniency applicant : 50% reduction Enterprises who coerced cartel : cannot get leniency benefits Stronger protection of confidentiality for applicants 3

5 II. Competition law and policy 1. Improvement of Cartel Coincidence of behaviors Substantial competition lessening Coincidence of behaviors Considerable circumstantial evidence 4

6 II. Competition law and policy 2. Improvement of merger review CRk-based review system Safe Harbor (1)Horizontal Merger i) the post-merger top 3companies market share < 50% and the merging company s market share < 25% ii) the post-merger company s rank : 4th or below (2)Vertical or Conglomerate Merger the market share of the top 3 companies in the market < 50% HHI-based review system Safe Harbor (1)Horizontal Merger When post merger, i) HHI < 1,200 ii) 1,200 < HHI < 2,500 and? HHI < 250 iii) HHI > 2,500 and? HHI < 150 (2) Vertical or Conglomerate Merger i) HHI of merging company < 2,500 & merging company s market share < 25% ii) merging companies rank 4 th or below 5

7 II. Competition law and policy 2. Improvement of merger review Determining anti-competitiveness Combined market share of merging Companies > 50% or Post-merger top 3 companies combined market share > 70% Market share or concentration analysis is only starting point Considering all factors? the state of market concentration, possibility of cartels after merger, possibility of new entrants, possibility of foreign competition, possibility of anti- competitive conduct by post merger company Local Nexus : 3 billion Won(3 million $)? 20 billion Won (20 million $) 6

8 II. Competition law and policy 3. Consumer Policy for consumer empowerment Consumer protection Consumer empowerment Consumer Policy Blueprint (April in 2007) linking competition and consumer policy to create a virtuous cycle 5 major tasks - Provision of accurate and sufficient consumer information - Establishment of practical framework for consumer education - Strengthening consumer safety infrastructure - Establishing consumer-oriented transaction laws for prompt damage redress measure - Protection of local consumers 7

9 II. Competition law and policy 4. Introduction of dispute settlement system Resolving cases by negotiations among related parties Unfair trade practices files for settlement? negotiation? settlement? No investigation Set up Korea Fair Trade Meditation Agency (Feb. 2008) Improving Sanction-oriented oriented enforcement 8

10 II. Competition law and policy 5. Competition advocacy activities Countries that have yet to induce competition law : Move fast to adopt one For the past 3 years, a total of 79 regulations reviewed and improved KFTC s Plan in 2008 regulatory reform measure for regulated industries finance, telecommunications, aviation, transportation overlapping regulation between KFTC and regulatory authorities KFTC signed an MOU with regulatory authorities(financial Services commission) KFTC s English homepage drastically improve statutes, guidelines(abuse of market dominance, cartel, unfair trade practice etc.), recent law enforcement activities 9

11 III. Law enforcement cases 1. Overview KFTC once put priority on prohibiting unfair trade practices Recently, focused on control cartel, mergers and abuse of market dominance Detected 27 Cartels and imposed surcharges 626 billion won(626 million $) Graphite eletrode(11.2 billion won, 02), Vitamin(3.9 billion Won03) Received 2,151 M&A filings for 3 years, imposing 14 corrective measures Detected 38 Abuse of market dominance for 3 years, imposed surcharged 56.5 billion Won (56.5 million $) Microsoft case(2006) 2 representative Cases in sugar price-fixing cartel, Pharmaceutical sector investigation 10

12 III. Law enforcement cases 2. Output control and price-fixing cartel by 3 sugar manufacturers Cartel on ex factory sugar price and output for 14 years Uncovered as 1 participant applied for leniency program - Agreed to fix sugar output during sales executives meeting in late Exchanging documents on monthly outputs and special excise tax payments etc. Corrective order, surcharge of 51.1 billion won, prosecuting - Typical hard-core cartel - Lasted for 14 years - One of the people s s basic commodities Prevented chronic consumer damage - sugar prices rose 40% (average inflation rate 20%) 11

13 III. Law enforcement cases 3. Outcome of pharmaceutical sector inquiry 10 companies provided rebates to hospitals - Giving cash or gift certificates - Bearing expenses of golfing or overseas trip - Providing computers or medical equipment - Bearing expenses of several hospital events (seminar) - Bearing advertising expenditure of hospital Judgment of illegality - Rebate practices? Increased medicine prices? Consumer damage (2,180 billion won) Corrective order, surcharge of 20 billion won (20 million $) 12

14 IV. Conclusion Challenge for competition law and policy in East Asia To specify the content of competition law and set up a clear criteria To ensure an environment where competition authorities can enforce the law independently To guarantee specialty of competition law enforcement To secure excellent officials, training for investigation, economic analysis To remove anti-competitive elements that were created During the government-driven economic development period To carry out competition advocacy to spread competition principle throughout the society 13

15 Thank you for your attention www. ftc.go.kr/eng/ 14