Retrospect and Prospect on Korean Antitrust Law

In restrospect, this paper considers and evaluates the development of the Korean Antitrust Act, which is the fundamental law of the economic order, since 1981. The direct objective of the Act is to promote free and fair competition, as well as to prevent the concentration of economic power. Its ultimate objectives, however, are the stimulation of creative business activities, consumer protection, and the promotion of the balanced development of the nationl economy. The Act contains substantive law regulations on monopolies and oligopolies, mergers, anticompetitive collaborative acts, unfair trade practices, ect. The Act also establishes a regulatory agency, the Fair Trade Commission, and puts in place enforcement procedures. The Korea Antitrust Act has “come of age.” It has made the nation as a whole aware of the importance of the fair trade system and made a substantial contribution to the correction of anti-competitive or unfair trade practices. It has not, however, reached the point of taking its rightful place as the foundation of the Korean economic oder because it has not converted monopolized and oligopolized market structures to competitive ones, nor has it prevented the excessive concentration of economic power. Looking ahead, this paper outlines wide-ranging proposals to reform the Act, including its substantive, organizational and procedural aspects. In particular, the Fair Trade Commission needs to devote itself solely to the work of maintaining and realizing the proper functioning of the market economy. Political issues such as the prevention of the concentration of economic power should be transferred to a separate body. Further, private remedies should be promoted in order to correct unfair trade practices. * Professor of Antitrust Law and Economic Regulation at College of Law, Seoul National University. He serves currently as the President of Korean Competition Law Association and at the same time as the Director of Center for Asian Law. I. The Objectives of Korean Antitrust Law A. Objectives of Korean Antitrust Law 1. The Direct Objectives of the Korean Antitrust Act Korea enacted the Monopoly Regulation and Fair Trade Act (the Korean Antitrust Act, hereinafter referred to as “the Act”) to promote free competition and fair trade in 1981. The Act has as its direct objective the promotion of fair and free competition. Fair and free competition is a necessary condition for permitting the market economy to function normally. Accordingly, countries that consider the market economy to be the foundation of their economic order generally have this type of law. In this sense we call the Antitrust Law the fundamental law of the economic order. A competitive market indicates a market in which commodities are sold at the price of the production cost plus reasonable profit and in which people willing to pay this price can purchase these commodities. However, for a certain market to satisfy these conditions, the market must be open to all enterprisers having the will and ability to participate in it (open market), and the participating enterprisers must be able to compete freely without any restriction (free competition). Further, the competition between enterprisers must be engaged in fairly, centring on better quality and lower price (fair competition). The stage of competition having all of these three great principles of competition is called “perfect competition”. However, in order to realize perfect competition, it must have the following elements. (1) All sellers produce perfectly identical products, so if we assume the products to be the same price, there is no difference from which seller the customer purchases. (2) The relative weight, within the whole, that the respective sellers active in the market take up is very small, so that even if the seller were to increase or decrease production volumes or, to an extreme, they were to withdraw completely from that market, that fact would not influence the decisions of other sellers in that market. (3) All capital is completely fluid and substitutable and all sellers can access equally necessary capital. (4) All participants in that market are well acquainted with price, production volumes and other information related to that market. Generally, as a certain market comes to satisfy these conditions, that market comes to function more competitively. However, as perfect competition is a Journal of Korean Law, Vol. 4, No.2, 2005