The amendment bill to comprehensively overhaul the Monopoly Regulation and Fair Trade Act (“MRFTA”) was passed by the National Assembly on December 9, 2020. Through this amendment (“Amendment”), which will become effective in December of 2021, the MRFTA will undergo its first complete overhaul in thirty years. The key aspects of the Amendment are as follows:
1. Exchange of information to fall under unreasonable collaborative (cartel) conduct
The current law enumerates conducts that constitute unreasonable collaborative (cartel) conducts, however, exchange of information is not included as one of those conducts. Courts also held that exchange of information was insufficient to find that a cartel had formed.
The Amendment includes, as cartel conduct, “exchange of information on price and output, and any other information prescribed by a Presidential Decree that practically restrains competition in a relevant market.”
2. Merger filing required for mergers with large transaction value even with a small target company
Under the current law, a merger notification must be filed with the Korea Fair Trade Commission (“KFTC”) when the total asset or total revenue of the target company is at least KRW 30 billion (approximately USD 28 million).
However, under the Amendment, the merger notification would still need to be filed even when the target company does not meet the threshold above, if the transaction value (i.e., the value paid as consideration) is greater than or equal to the amount prescribed by a Presidential Decree.
3. Private persons given standing to file injunctions
The current law does not allow a party injured from an antitrust violation from filing an injunction with a court. Instead, such party can only file a complaint with the KFTC seeking an administrative action by the KFTC.
Under the Amendment, a person who is injured or is likely to be injured from an unfair trade practice may file with a court an injunction prohibiting the company that engages in or is likely to engage in such unfair trade practice from committing the violation, or claim for prevention. However, when a claim for injunction is filed, the court may, at its discretion or based on a motion by the defendant, order the plaintiff to deposit an appropriate amount as collateral to protect the interests of the defendant.
4. In damage suits, parties are obligated to produce materials necessary to prove the harm or calculate the amount of damages incurred
Under the Amendment, parties, in civil lawsuits for damages arising from cartels or unfair trade practices, may be ordered to produce materials that are necessary to prove the harm or calculate the amount of damages unless the owner/holder of such materials has justifiable reason to refuse such production. The argument that the materials are protected as trade secrets will not be deemed a “justifiable reason” if such materials are essential to proving the harm or calculating the amount of damages. When a trade secrets claim is made, courts must limit the scope of materials that could be accessed or designate persons to which access to such materials will be granted.
5. Increase of administrative fines
The standard for imposing administrative fines has been changed as follows:
- Abuse of market dominance: raised from 3% to 6% of relevant sales
- Cartel: raised from 10% to 20% of relevant sales
- Unfair trade practices: raised from 2% to 4% of relevant sales