Korea’s Recent Trends for Antitrust Enforcement in Response to COVID-19
The outbreak of COVID-19 significantly affected businesses across all industries during recent months. To regulate the businesses coping with sudden adjustments, the Korea Fair Trade Commission (the “KFTC”) has implemented various measures. Among them, we highlight the following.
July 13, 2020
Impact of COVID-19 considered as a factor in merger review processes
One of the industries struck heavily by COVID-19 is the airline industry and a number of airlines and aviation-related businesses in Korea are understood to be on the brink of bankruptcy. Such extraordinary circumstances played a role in the recent KFTC’s approval of Jeju Air’s acquisition of shares in Eastar Jet, both once-prominent low-cost airlines of Korea. The KFTC granted unconditional clearance for the proposed merger, accepting the failing firm defense, given Eastar Jet’s unstable financial status. In reaching such a decision, the KFTC noted that it is unlikely for Eastar Jet to quickly recover its ability to repay its debts, given how it suspended both its domestic and overseas flights and is in the process of restructuring its labor force. Through the decision, the KFTC revealed its intent to quickly review merger notifications filed by business entities related to the industries suffering from financial difficulties due to COVID-19.
Implementation of Procedural Extension
The KFTC also implemented measures to relieve the businesses affected by COVID-19 from the additional burden of submitting materials to the KFTC. Before COVID-19, examinees involved in the KFTC’s investigations were obligated to submit their opinions on the Examiner’s Report issued by the KFTC within four weeks (three weeks for cased adjudicated before the condensed three-member panel). In response to most businesses making the transition to telecommuting to avert COVID-19 outbreak, the KFTC announced that it would temporarily extend the above deadline to six weeks (five weeks for cases adjudicated before the condensed three-member panel). In doing so, it applied the proviso to the procedural rule that the KFTC may change the deadlines where it is determined that more time than the statutory four weeks would be necessary for submitting the examinee’s opinion. The KFTC announced that it expects the two-week extension to allow sufficient time for the examinee to submit its opinion, thereby guaranteeing the examinee’s right to defense. The extension is expected to be granted until the COVID-19 situation subsides.
Establishment of Additional Guidelines
On May 15, 2020, the Korean government announced its plan to improve the system for aiding recovery from COVID-19. The plan focuses on strengthening the foundation of fair trade in the market, taking into account that the economic and social damages resulting from COVID-19 are more likely to affect the financially-challenged. As part of this plan, the KFTC announced its decision to establish new guidelines.
First, in order to address the rapid growth in the online distribution market to avoid in-person contacts, the KFTC plans to establish a guideline to more effectively regulate unfair trade practices that occur online, such as online distribution platforms shifting the cost to the distributors. The current regulation on large retail businesses is tailored to in-person transactions and therefore has limitations in regulating the unfair trade practices in online distribution markets.
Another guideline to be implemented by the KFTC focuses on the protection of consumers’ rights. COVID-19 caused a rapid increase in the cancellation of contracts and disputes over default payments in certain industries such as the tourism and the wedding industries. The KFTC, therefore, announced that it plans to establish a standard for exemption, adjustment, and deduction of default payments for certain industries.
Items You Might Have Missed
New KBLA Tools for Business Warriors
One of the driving goals of KBLA in 2020 is to create and offer new tools to aid each member of the KBLA community in accomplishing their business goals.
We have a list of new, exploratory tools to bring out over the course of the year, all of which fall into one or more of three categories that mesh with the KBLA’s overall mission.
Oct. 29, 2019
A New KBLA for 2020
There are many changes coming to KBLA in 2020. We hope you’ll stay with us and experience all we have lined up. We think this is going to be the best iteration yet. Joining KBLA is a chance to support real change among business communities in Korea.
Nov. 19, 2019
Why Does KBLA Exist?
Korea needs foreign participation in the domestic economy like never before.
The world is changing and Korea is changing. Korea has new and existing challenges in rapidly weakening demographics, highly concentrated market structure, increasing protectionism, rising export similarity among competitors, low productivity growth, low domestic investment levels, and the rising importance of services. Most, if not all, of these things can be overcome through increased participation of the global business community in the Korean economy.
Nov. 24, 2019
It’s 2020, Do You Know Where Your Meeting Attendees Are?
We know one thing: they are not at your meeting. That’s because in-person meetings aren’t what they once were: the only game in town. In 2020, along the curve of value for cost, meetings are are not just at the low end, they are downright abysmal.
Dec. 24, 2019
Act on Online Investment–Linked Financing and User Protection (aka P2P Financing Act) Promulgated on November 26, 2019
The Act on Online Investment–Linked Financing and User Protection (the P2P Financing Act) passed the plenary session of the Korean National Assembly on October 30, 2019 and was promulgated on November 26, 2019.
Jan. 8, 2020