Title

The Comparative Analysis on the Presumption of Cartel Agreements Which is Unique in the Korean Cartel Regulation Provision

Authors

Woo-Jong Jon

Abstract

In terms of cartel regulation, Korea has a “presumption of agreement” provision that does not exist in the United States or in the European Union (EU). This provision is Article 19(5) of the Monopoly Regulation and Fair Trade Act (MRFTA). This provision was created for the convenience of enforcement because firms made cartel agreements by more sophisticated methods as the cartel regulation became more intense. Accordingly, in the continental law of Korea the approach of the courts in relation to cartel regulation is somewhat different to the United States. However, in terms of a standard for deciding specifically what to regulate as a cartel and what to permit, Korea, the United States, and the EU use generally similar standards. Prohibiting tacit agreements as cartels but not regulating conscious parallelism is common to these countries.

In relation to the effect of the presumption, the issue is whether to understand the presumption in Article 19(5) of the MRFTA as a civil procedure law presumption or as an “administrative law presumption”. In terms of methods of applying the provisions, these can broadly be divided into two methods. First, there is the stance of the Korean Supreme Court, which interprets Article 19(5) faithfully to its wording, the cases hold that if one only proves the two facts of “outward conformity of conduct” and “competition-restrictiveness” that the firm provisionally “shall be presumed to have committed an unfair collaborative act.” Recently, however, many cases have emerged in which the presumption was rebutted. Second, the Korean Fair Trade Commission (FTC), even if it proves the “outward conformity of conduct” and “competition-restrictiveness,” does not regulate the “agreement” directly as an undue collaborative act by presumption, but it investigates deeply into the facts of an agreement to engage in collaborative acts or circumstantial facts so as to factually presume that the outward conformity of conduct was a collaborative act due to an agreement.

In fact, the result is that the presumption provision Article 19(5) of the MRFTA is enforced, differing from a civil procedure law presumption. As a result, cases follow the process of overturning the presumption again after first allowing the presumption of agreement due to Article 19(5) of the MRFTA. However in reality they regulate the cartels focusing on the same basis as the United States and the EU. The ultimate difference is that in the case of Korea, the burden of proof is on the firm to prove that there was no agreement. But, as stated above, it is ultimately desirable to amend or delete Article 19(5) of the MRFTA due to the problems of the imbalance in the burden of proof.

Disciplines

Antitrust and Trade Regulation | Comparative and Foreign Law | International Trade Law | Law and Economics

Date of this Version

October 2005