SOUTH KOREA Trends and Developments Contributed by: John H. Choi, Changhun Lee, Hyunah Kim and Jae-Hyuk Choi, Shin & Kim
( “Division 6-2” ) upheld the KFTC’s decision (Seoul High Court, Oct. 23, 2024, Case No 2022Nu61382). In other words, two divisions of the Seoul High Court issued opposing rulings on the same matter within a one-month interval. Division 6-2 held that Company B’s participation in the Production Volume Restriction Agreement constituted an unfair restriction of competition, and also acknowledged the existence of a price increase agreement. First, with regard to the Production Volume Restriction Agreement, Division 6-2 acknowl - edged that Company B had entered into such an agreement. Division 6-2 further determined that the agreement did not constitute “legitimate conduct under other laws” as prescribed by Arti - cle 58 of the former MRFTA, and that the MRFTA therefore applied to the case. The grounds for this conclusion were similar to those set out in the ruling of Division 3. However, on the issue of whether the Production Volume Restriction Agreement unfairly restrict - ed competition, Division 6-2 reached a different conclusion from that of Division 3. Citing the fac - tors below, Division 6-2 found that the agree - ment restricted competition in the fresh duck meat market, resulting in significant effects on production and pricing, while no sufficient effi - ciency-enhancing effects were demonstrated. Accordingly, the court held that the agreement constituted an unfair restriction of competition. • The Production Volume Restriction Agree - ment had a significant impact on the sup -
ply of fresh duck meat, and given the high combined market share of the companies involved, the agreement likely had a consider - able anti-competitive effect on the market. In fact, duck meat prices increased during the period in which the agreement was imple - mented, and decreased after the agreement ended. • The agreement was reached independently by the companies in advance, and MAFRA could not be seen as having led the pro - duction control. Moreover, no evidence of sufficient efficiency-enhancing effects was presented to outweigh the anti-competitive effects of the agreement. • While the Constitution and relevant statutes provide mechanisms to protect the agricul - tural and livestock industries, the companies employed highly anti-competitive means with substantial supply-reducing effects, despite the availability of less restrictive alternatives. Furthermore, the procedures laid out in the applicable legal frameworks established to protect the agricultural and livestock sectors were not followed. In addition, with respect to the Price Increase Agreement, Division 6-2 found that Company B had reached an agreement with other compa - nies to raise the price of fresh duck meat. While Division 3 had concluded in a separate ruling that there was insufficient evidence to establish Company A’s participation in the Price Increase Agreement, Division 6-2 determined that both Company A and Company B were involved in a co-ordinated effort to increase prices.
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