Competition Litigation Comparative Guide

• Law Firm: Kwon, Park & Rhee
• Subject Matter: ntitrust/Competition Law, Antitrust, EU Competition
• Author: Mr Namwoo Kim and Ahreum Lim
• Published date: 17 January 2023

1 Legal framework

1.1 Which laws regulate competition in your jurisdiction?

The Monopoly Regulation and Fair Trade Act (MRFTA) is the primary source of law governing competition matters in Korea. The MRFTA is the counterpart of the United States Sherman Act and the Treaty on Functioning of the European Union.

1.2 Which authorities are responsible for enforcing the competition legislation? What is their general approach to enforcement?

The Korea Fair Trade Commission (KFTC) is responsible for administering and enforcing the MRFTA. The KFTC, which is part of the executive branch, is an independent regulatory agency. The KFTC is led by nine commissioners, appointed by the president of South Korea for three-year terms. The term can be extended only once by another three years. The KFTC has five bureaux:

• Business Groups;
• Cartel Investigations;
• Consumer Policy;
• Business Trade Policy; and
• Anti-monopoly.

The KFTC, headquartered in Sejong-si, has five regional offices in Seoul, Busan, Gwangju, Daejeon and Daegu.

After a report has been filed by a victim of a breach of the MRFTA or any person with knowledge of an actual or potential breach of the MRFTA (Section 2, Article 80 of the MRFTA), the KFTC may initiate an investigation by giving notice of the investigation to the person who allegedly is violating or has violated the MRFTA. The KFTC may also begin its investigation ex officio. The KFTC will present the notice of investigation on site to the respondent at the beginning of a dawn raid or on-site investigation. The KFTC must reveal substantial information of the investigation in the notice, including:

• the objectives of the investigation;
• its anticipated duration; and
• the method of investigation.

If the KFTC believes that the MRFTA is being or has been violated following its investigation, it will issue and serve an examiner's report to the respondent. This report is a charging document consisting of factual allegations with citations on violations of the MRFTA (it is the equivalent of an administrative complaint in the United States and a statement of objections in the European Union). The respondent is given the opportunity to object to the allegations during the investigation and even after the examiner's report has been released. Respondents (and even interested parties) are allowed to present their opinions or provide testimony to the KFTC even after the report has been issued; however, further investigation after issuance of the report is prohibited, unless approved by the KFTC).

Following the release of the examiner's report, the KFTC will hold a hearing on the charges set forth in the report; additional hearing(s) can be held, but this is not common. After the hearing(s), the KFTC will deliberate and render its decision on the case. The KFTC cannot bring a case directly to the court for remedies instead of instituting administrative proceedings briefly described above.

The respondent may appeal the KFTC's decision to the Seoul High Court, which has exclusive jurisdiction over appeals of KFTC decisions. The appellate court's decisions may be appealed to the Supreme Court, the highest court in South Korea.

2 Private claims

2.1 What types of private claim may be brought for breach of competition law in your jurisdiction?

Anyone that has suffered injury resulting from a breach of competition law may bring an action seeking compensation for damage to the court. Such private damages suits may either follow on from a successful government case (ie, a follow-on suit) or as a standalone suit. Most private damage litigations are follow-on or piggyback actions because the plaintiff may rely on the prior findings of the Korea Fair Trade Commission (or the judgment of the appellate or Supreme Court). However, such government findings and the court judgment need not be final.

In addition, anyone that has suffered or is likely to suffer injury from a breach or likely breach of competition law may request the district court to enjoin the defendant from continuing or preventing the breach. However, an injunctive remedy is available only for:

• unlawful resale price maintenance; and
• unfair trade practices under the Monopoly Regulation and Fair Trade Act (MRFTA), such as
• • unfair refusal to deal;
  • unfair discriminatory conduct;
  • unfair exclusionary conduct;
  • unfair coercion or inducement of a competitor's customer to trade with itself;
  • abuse of a superior bargaining position;
  • trade with a trading party under unfairly restrictive conditions;
  • unfair interference with a trading party's business activities; or
  • any other conduct that could harm fair trade.

Injunctive remedies were introduced to the MRFTA in 2020.

2.2 What is the legal basis for bringing a claim for breach of competition law?

The legal basis for bringing a breach claim of competition law are stipulated under Articles 108 and 109 of the MRFTA, which provide for:

• injunctive relief (for a limited scope of MRFTA offences - see question 2.1); and
• a monetary damages action.

Article 108 of the MRFTA allows anyone threatened with loss or damage from unfair trade practices or unlawful resale price maintenance under the MRFTA to seek injunctive relief in the district court. The injured party may seek injunctive relief to enjoin the defendant from a continuance of such violations of the MRFTA.

Article 109 of the MRFTA allows anyone that is injured by a breach of the MRFTA to file a civil damages action. At its discretion, the court may award punitive damages - up to treble damages - only to the victims of:

• unlawful cartels; or
• retaliatory action by a party accused of an unfair trade practice or unlawful resale price maintenance under the MRFTA.

The damages that can be recovered from a successful leniency applicant for cartel activities are limited to actual (or compensatory) damages suffered by the plaintiff(s), as opposed to the punitive damages permitted by the MRFTA.

The nature of a private damages action under Article 109 of the MRFTA is generally based in tort (Article 750 of the Civil Code). Thus, the Civil Code addresses issues not stipulated in the MRFTA. For instance, the limitation period is:

• three years from the date of the plaintiff learning of the damage and the person who caused such damage; or
• 10 years from the date of knowledge of the cause of action, whichever is earlier.

Further:

• defendants that have been found civilly liable for conspiring with each other to violate the MRFTA are jointly and severally liable for the plaintiff's damages; and
• a defendant that pays more than its share of a judgment against multiple defendants has the right to seek contribution from others in accordance with Article 760 of the Civil Code. (A successful leniency applicant for cartel offences is jointly and severally liable for the plaintiff's actual (or compensatory) damages only, and not for any punitive damages awarded by the court.)

3 Parties

3.1 Who has standing to bring a claim for breach of competition law?

Anyone that has knowledge of a breach of competition law may file a report with the Korea Fair Trade...