• Categories of general unfair trade practices: ① Unfairly refusing a transaction; ② Discriminating against a transacting party; ③ Unfairly excluding competitors; ④ Unfairly soliciting customers; ⑤ Unfairly coercing customers; ⑥ Unfairly taking advantage of one’s bargaining position; ⑦ Trading under terms and conditions which unfairly restrict business activities of a transacting party; ⑧ Disrupting business activities of another enterprise; and ⑨ Unfair provision of funds, assets, manpower, etc.
  • Any unfair labeling or advertising that deceives or misleads consumers is governed by the Act on Fair Labeling and Advertising (’99).
  • In order to regulate typical acts which frequently disadvantage transacting parties by taking advantage of one’s bargaining position, the Fair Transactions in Subcontracting Act and the Fair Transactions in Franchise Business Act were enforced in 1984 and 2002, respectively.
• Categories of particular unfair trade practices have been determined by the following public notifications:
  • Notification of the Categories of and Standards for Unfair Trade Practices concerning Provision of Giveaways;
  • Notification of the Categories of and Standards for Unfair Trade Practices concerning Large-scale Retail Businesses;
  • Notification of the Categories of and Standards for Unfair Trade Practices concerning the Newspaper Industry

• A business owner refuses to commence a transaction, discontinues any ongoing transaction or substantially limits the quantity or contents of goods or services in a transaction without just cause (The former part of Article 23 (1) 1 of the Monopoly Regulation and Fair Trade Act).
  • Example: While a liquor manufacturer was supplying its beer to supermarkets, etc., it refused to supply its beer to certain supermarkets on the ground that they did not purchase its whiskies.

• A business owner discriminates against a transacting party on the basis of regions, prices or other conditions of transaction. By doing so, it maintains and strengthens its position by weakening the transacting party’s position (The latter part of Article 23 (1) 1 of the Monopoly Regulation and Fair Trade Act).
  • Example: A salt maker, in doing transactions with two sales agencies A and B, discriminated against B which is an existing sales agency by raising the cash payment ratio for B up to 100 percent and decreasing the salt supply ratio to B while allowing 50 percent of the cash payment ratio for A without just cause.

• A business owner sells goods or services at a price substantially lower than their supply cost, or purchases them at a price unreasonably higher than a commonly charged price competing abnormally in order to exclude its competitors (Article 23 (1) 2 of the Monopoly Regulation and Fair Trade Act).
  • Example: A toothpaste manufacturer supplied 3.3 million tubes of toothpaste after winning a tender at the price of one KRW per tube in order to exclude its competitors from the market.

• A business owner unfairly solicits customers of its competitors to transact with itself by such means as provision of excessive benefits, preventing conclusion of a contract or inducing non-compliance with a contract (The former part of Article 23 (1) 3 of the Monopoly Regulation and Fair Trade Act).
  • Example: In supplying medicines that pharmaceutical companies manufactured and supplied to domestic hospitals, such pharmaceutical companies gave money to general hospitals, etc. in exchange for choosing their medicines (“landing fees”) and prescribing their products (“rebates”), as well as for entertainment expenses, and other purposes, in order to increase sales by increasing introduction and prescription of their medicines.

• A business owner unfairly coerces customers of its competitors to transact with itself by bundling products or forcing its executives and employees to purchase and sell goods or services against their will. (The latter part of Article 23 (1) 3 of the Monopoly Regulation and Fair Trade Act)
  • Example: A wedding hall owner rented its wedding hall to customers on condition that they use the restaurant in the wedding hall or that they rent wedding accessories and supplies, including a wedding dress and wedding clothing from the wedding hall.

• A business owner who holds a superior bargaining position unfairly abuses such position to impair free decision making of a transacting party, giving him/her disadvantages in trade. (Article 23 (1) 4 of the Monopoly Regulation and Fair Trade Act)
  • Example: A manufacturer of famous brand electronic products supplied an excess quantity of products to a sales agency without an order from it, irrespective of the sales agency’s level of inventory or intention to order.

• A business owner trades under terms and conditions which unfairly restrict business activities of a transacting party by restricting regions in, or parties with which it may transact, thereby limiting free and fair competition in the market. (The former part of Article 23 (1) 5 of the Monopoly Regulation and Fair Trade Act)
  • Example: A company banned its bottled water sales agencies from selling its competitors’ products and when they disregarded the ban, it imposed restrictions on the agencies, such as imposing penalties or terminating the contract.

• A business owner unfairly solicits customers of its competitors to transact with itself by such means as provision of excessive benefits, preventing conclusion of a contract or inducing non-compliance with a contract. (The latter part of Article 23 (1) 5 of the Monopoly Regulation and Fair Trade Act)
  • Example: In supplying medicines that pharmaceutical companies manufactured and supplied to domestic hospitals, such pharmaceutical companies gave money to general hospitals, etc. in exchange for choosing their medicines (“landing fees”) and prescribing their products (“rebates”), as well as for entertainment expenses, and other purposes, in order to increase sales by increasing introduction and prescription of their medicines.

A business owner assists a related party or other companies by unfairly providing advanced payments, loans, manpower, immovable assets, securities, goods, services, intangible property rights, etc. or by transacting under substantially favorable conditions. (Article 23 (1) 7 of the Monopoly Regulation and Fair Trade Act) As unfair assistance is provided through internal transactions between affiliates of the same corporate group, it is called “unfair internal transaction.”

Giveaways mean economic benefits, including goods that a business owner accords to its customers upon transaction of goods or services. Price reduction, discounts or after-sales service that is usually recognized as commercial practices are not regarded as giveaways.

When competition among businesses becomes unfair due to the use of economic power, such as excessive provision of giveaways, in contrast to ordinary competition based on price, quality and service, it becomes difficult to guarantee promotion of fair competition among businesses. Excessive provision of giveaways distorts customers’ rights to make right choices, and it is possible that the cost of such giveaways is passed on to the customers.

Businesses subject to regulation: For manufacturers, those whose annual turnover is at least 20 billion KRW and for other businesses, those whose annual turnover is at least 2 billion KRW are subject to regulation.

• Consumer prize-provided sale means that a business owner provides economic benefits to general consumers in the form of a prize incidental to transactions. Generally, the customers to receive a prize are chosen randomly.
• The price of a prize that a business owner can offer in a sales promotion shall not exceed 20 million KRW, and the total amount of all prizes offered shall not exceed 3% of sales projections of the goods or services in connection with which prizes are provided. For more information, please refer to “Notification on the Categories of and Standards for Particular Unfair Trade Practices concerning Giveaways”.

It is necessary to prevent large-scale retailers, including department stores, large marts, and TV home shopping program providers, from unfairly disadvantaging suppliers, store tenants, etc. who are transacting parties by using their superior bargaining position.

Unfair return: Returning all or some of the goods, either order-made or directly purchased, to the relevant supplier, except where it is recognized as a customary business practice or it is specifically agreed in writing in advance (Article 3 of the Notification) Unfair reduction of price: Reducing the price of goods after purchasing them from a supplier (Article 4 of the Notification) Unfair refusal of acceptance: Delaying or refusing to accept all or some of the supplies despite no reason attributable to the supplier (Article 7 of the Notification) Unfairly charging promotion costs, etc.: Transferring the cost, etc. unrelated to sales promotions for the supplied goods, transferring the cost not predetermined, etc. (Article 8 of the Notification) Duty of concluding a written contract and unfairly changing any terms of a contract (Article 11 of the Notification) ※ For more information, please refer to “Notification on the Categories of and Standards for Particular Unfair Trade Practices concerning Large-Scale Retail Businesses”.

It is necessary to establish order in the newspaper market by preventing any unfair solicitation of transactions, including excessive provision of free newspapers, and giveaways.

Restricting provision of free newspapers and giveaways: Unfairly soliciting customers of competitors to transact with it. (Article 3 of the Notification) Unfairly soliciting customers: Delivering newspapers for seven days or more to a person who has expressed his/her intention to cancel the subscription for the newspaper after his/her subscription contract had expired (Article 4 of the Notification) Unfairly coercing transactions: Coercing employees, after hiring them at a significantly low or no salary in comparison with the market price, to sell advertised products on condition that a portion of the price of receiving orders for the advertisement will be given to them as their remuneration (Article 7 of the Notification) Exclusive dealing: Unfairly prohibiting a newspaper distributor from selling other publishers’ newspapers without a prior contract or consent (Article 8 of the Notification) For more information, please refer to “Notification on the Categories of and Standards for Particular Unfair Trade Practices concerning the Newspaper Industry”.