SOUTH KOREA Trends and Developments Contributed by: Choon Won Lee and Dahee Kim, Jipyong LLC
Jipyong LLC 26F, Grand Central A 14 Sejong-daero Jung-gu
Seoul 04527 South Korea
Tel: +82 2 6200 1910 Fax: +82 2 6200 0811 Email: cwlee@jipyong.com Web: www.jipyong.com
Shipping Companies File Lawsuit Against KFTC on KFTC’s Decision to Impose Fine for Price Fixing on Korea–South-East Asia Sea Routes KFTC’s decision In January 2022, the Fair Trade Commission of Korea (KFTC) issued its decision imposing a fine totalling KRW96.2 billion (approximately USD80.7 million) on 23 foreign and domestic shipping companies (KRW66.2 billion on 12 domestic companies and KRW30 billion on 11 foreign companies) for price fixing on Korea– South-East Asia sea routes over a 15-year period (from 2003 to 2018). While the fine was significantly reduced compared to the one in the initial investigation report – to about one- eighth – most shipping companies have strongly criticised the decision and have filed lawsuits before the Seoul Appellate Court of Korea. Only one Korean company has accepted the KFTC’s decision without filing a lawsuit. Evergreen case – Seoul Appellate Court’s decision (February 2024) The Seoul Appellate Court of Korea issued a landmark judgment in the case of Evergreen, cancelling the KFTC’s decision to impose a fine
for alleged price-fixing activities. The court’s reasoning rested on the interplay between the Monopoly Regulation and Fair Trade Act (MRFTA) and the Marine Transportation Act (MTA): • Application of the MRFTA: While the MRFTA broadly prohibits anti-competitive practices such as price fixing, the court acknowledged that industry-specific legislation, such as the MTA, may allow certain exceptions. • Role of Article 29 of the MTA: Article 29 explicitly permits shipping companies to engage in joint activities, such as rate-setting agreements, provided these activities are reported to and approved by the Ministry of Oceans and Fisheries (MOF). • Regulatory jurisdiction: The court determined that the MOF, not the KFTC, holds regulatory authority over joint shipping activities under the MTA. Thus, the KFTC’s imposition of fines encroached on the MOF’s jurisdiction. • Outcome: The decision cancelled and invali - dated the KFTC’s imposition of a fine against Evergreen. This judgment sets a critical prec - edent by recognising the legal boundaries between general competition laws (MRFTA) and industry-specific regulations (MTA).
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