Ask Korea Law

Published by Chung & Partners


1 Comment

Supreme Court of Korea Ruled Music DRM Does Not Violate Competition Law – Abuse of Dominant Market Position in Mobile Phone and Music Download Service

There have been disputes as to whether Digital Rights Management(DRM) does violate competition law.  By using a DRM, the company can tie the playback of certain digital files to its own IT device.  The problem arises when the company has a dominant market position, because it entails an argument from competitors that the company has abused its dominant market position to distort a free competition at the market.

In November last year, the Supreme Court of Korea firstly issued a ruling addressing this issue.  The case dates back to 2006, when Fair Trade Commission(FTC) of South Korea ordered SK Telecom, the largest mobile carrier company and music download service provider, to lift up a DRM which had prevented the purchasers of MP3 mobile phone of SK Telecom from playing MP3 files downloaded from other online music store that SK Telecom does not operate.  SK Telecom had appealed the FTC’s decision to the court.

At the heart of this lawsuit lies the issue of whether SK Telecom’s use of DRM does constitute an abuse of its dominant market position under Korean Competition law.  In this regard, the Monopoly Regulation and Fair Trade Act(MRFTA) of Korea provides that any market dominant enterpriser shall not commit an act of either (i) unreasonably interfering with the business activities of other enterprisers or (ii) unreasonably doing considerable harm to the interests of consumers.  The FTC found SK Telecom’s using a DRM Continue reading


Leave a comment

FTC’s Antitrust Ruling on Intel Goes to the Court

Yesterday it was reported that Intel Corp. had filed a lawsuit to the Seoul High Court against a 26 billion won ($18.7 million) fine handed down by Fair Trade Commission(FTC).

Previously the FTC fined Intel in June for abuse of its market dominating position after a three-year investigation.   According to the agency, Intel had been offering rebates to major local personal computer makers, including Samsung Electronics, on condition that they not buy central processing units from Intel’s rival, U.S.-based Advanced Micro Devices.

Under Monopoly Regulation and Fair Trade Act(MRFT) of Korea, “No market-dominating enterpriser shall commit acts such as unreasonably interfering with the business activities of other enterprisers or unreasonably impeding the participation of new competitors”.  Intel is currently being regarded as a market-domination enterpriser under MRFT.

Intel stated in its complaint that FTC  had made errors both in fact finding and legal reasoning and the Court would confirm there had been no violation of law in Intel’s business in Korea.

© 2008 Wonil Chung, a Korean Anti-trust Lawyer/Chung & Partners, a Korean Anti-trust Law Firm.  All rights reserved. Some copyrights, photos, icons, trademarks, trade dress, or other commercial symbols that appear on this post are the property of the respective owners.


Leave a comment

FTC Investigates 3 National Broadcasters’ Abusing Market Dominating Position in TV Drama Copyright dispute

It is reported that the Fair Trade Commission, the Korean Antitrust watchdog, has begun an investigation whether 3 national broadcasters, KBS, MBC, SBS, violated Fair Trade Law.  Before this investigation, TV drama producers had publicly claimed that 3 broadcasters abused their market dominating positions and forced them to assign all the intellectual properties regarding the produced drama to the broadcasters.  The producers also alleged that the broadcasters have fixed consignment sale fees. Continue reading


Leave a comment

FTC to Take on Global Cartels

It was reported yesterday that The Fair Trade Commission of South Korea(FTC) has opened a new division to investigate and monitor international cartels. The new division will be responsible for monitoring foreign companies for possible fair trade law violations as well as those carried out by foreign business associations. There have been increasing number of cross-border cartels suspected of violation on fair trade laws. However,until now, the FTC has been unable to crack down international cartel cases Continue reading


Leave a comment

Anti-Cartel Enforcement under Korean Laws

This is an ICN(International Competition Network) Anti-Cartel Enforcement Template published on 2007. 5. 9. This template introduces very useful information regarding Korean legislation and related topics on cartels such as:

Information on the Law Relating to Cartels
Scope and Nature of Prohibition on Cartels
Investigation Institutions
Decision-making Institutions
Handling Complaints and Initiation of Proceedings
Leniency Policy
Investigative Powers of the Enforcing Institutions
Procedural Rights of Continue reading


1 Comment

Korean Supreme Court’s Ground-Breaking Decision Regarding “Unfairness” in the Abuse of Market Dominating Position in POSCO Case

 

The Monopoly Regulation and Fair Trade Act of Korea(herein after the “Act”) prohibits certain types of act as a market dominating enterpriser’s act of abusing its status(for example, a transaction refusal act). However the Act requires the existence of “unfairness” in market dominating enterpriser’s act. So there has been a dispute with regard to how to determine the existence of “unfairness”.

This case is the first Supreme Court’s decision on that key issue in anti-trust law where POSCO refused to supply hot rolled steel coils to a local company. The Supreme Court held that “unfairness should be acknowledged only where a transaction refusal act can be deemed as perpetrated with intent or objective of maintaining or reinforcing monopolistic status at the market, i.e., influencing a market order artificially by restricting a free competition at the market, and with the evaluation that the refusal act is likely to have anti-competition effects from the objective point of view”.

Also the court held that “the party alleging a market dominating enterpriser’s act of abusing its status must prove that the transaction refusal has the intent and objective as an act likely to cause effects of suppressing a competition such as price increase of the goods, decrease in output, harming the innovation, decrease in the number of capable competitors, decrease in diversity, etc. If the above effects are proven to appear actually, it can be inferred that the act was likely to cause suppression upon competition, and there was intent or purpose as to this.”

The court further held that “If the above effects are not proven, it should be determined whether the act of refusal has the intent or purpose as an act likely to suppress the competition effectively by considering various factors as a wholesuch as the circumstance or motive of transaction refusal, attitudes, characteristics of the relevant market, degree of disadvantage due to refusal, existence of change in price and output, harm to innovation and reduction in diversity, etc.”

Finally the Supreme Court decided that there is “lack of proof that competitions restraining effects such as production decrease or price increase were likely to occur due to a transaction refusal act [by POSCO]”.

The Supreme Court reversed the lower court’s decision and the case was remanded to the lower court for a new trial and determination.

You can find the English translation of the decision here.

© 2008 Wonil Chung, a Korean Business Lawyer/Chung & Partners, a Korean Business Law Firm. All rights reserved. Some copyrights, photos, icons, trademarks, trade dress, or other commercial symbols that appear on this post are the property of the respective owners.

 

Follow

Get every new post delivered to your Inbox.

Join 35 other followers