[July 2016] Park Shinhyun, The Supreme Court Denies the Existence of Price-Fixing Agreement Among Instant Noodle (Ramyeon) Ente
The Supreme Court Denies the Existence of Price-Fixing Agreement Among Instant Noodle (Ramyeon)Enterprises
On December 24, 2015, the Supreme Court denied that instant noodle (Ramyeon) enterprises had reached a collusive agreement, reasoning that there was no significant evidence to corroborate the existence of such unlawful negotiation(2013Du25924).
The Monopoly Regulation and Fair Trade Act bans not only the explicit agreement but also the implicit agreement that restricts the fair competition. Also, in judicial precedent, the Supreme Court acknowledged the existence of an “agreement” as a requirement for improper cartel, when there was a substantial ground thateach enterprise had communicated their intentions(2012Du17421).
Furthermore, the Supreme Court stated that generally the exchange of information among companies is one of the convincing evidence of a prior agreement, as such exchange may well have served as trigger for aprice-fixing agreement,. That said, the Supreme Court noted that information exchange in itself should not be conceived as an illegal agreement restricting fair trade. Thus, the Supreme Court ordered the Seoul HighCourt to review the main agents, methods, time, aim and contents of the information exchanged and also the results and the impact thereof on the market, in order to decide whether there had been the type of an agreement prohibited by the Monopoly Regulation and Fair Trade Act
In the lower-court trial, the high court acknowledged that there were two to six occasions, where implicit agreements rigging the prices of instant noodles, following the initial explicit agreement on the subject matteramong such instant noodle enterprises (as Nongshim, Korea-Yakult, Ottoggi, and Samyang F&B). As a result of the high court decision, the instant noodle enterprises were supposed to pay fine for violating the fair trade regulation.
However, the Supreme Court held as following. Firstly, the existence of the initial explicit agreementwas ungrounded since its contents were ambiguous and the impact thereof on the market was insignificant. Secondly, the information exchange among the companies after the initial agreement thus should not be considered to be extension of the aforementioned explicit agreement nor an implicit agreement. The SupremeCourt pointed out in detail that each enterprise had different rates of price increase and that the evidencesubmitted were not convincing enough to corroborate the existence of any actual negotiation on the alleged collusion. In conclusion, the decision of the lower-court trial was thrown out out by the Supreme Court due tothe lack of evidence.
On the contrary, several other countries ban information exchange among companies and even consider ita testament to an agreement prohibited by the law. For instance, the EU considers the information exchange to be the substantial proof of an illegal agreement, regardless of the contents and impacts thereof on the market. Moreover, Australia and Mexico ban information exchange through regulation. Consequently, a number ofcountries apply more strict regulations than South Korea does, concerning the issue of information exchangeamong competitors.