3. The KFTC Decision
1) The Initial Decision
The KFTC decided that the three school uniform manufacturers’ agreement to help their wholesalers and sales agencies determine or maintain the selling price of school uniforms after holding meetings with the central consultation committee constituted an act of fixing, maintaining, or changing prices under Article 19 Paragraph (1) Item 8 of the MRFTA. It further decided that their act of jointly interfering with cooperative purchase efforts or small companies’ participation in public bidding, prohibiting or restricting sales agencies from offering free or promotional gifts, and determining their agencies’ shop opening in a department store. It decided that the rate of commissions paid to department stores was tantamount to an act of interfering with or restricting the business activities of other enterprisers set forth in Article 19 Paragraph (1)
Item 8 of the MRFTA. Under Articles 21 and 22 of the MRFTA, the KFTC ordered corrective measures and imposed a surcharge of a total of KRW 8.94 billion on the three companies. The three school uniform manufacturers were also ordered to announce their violation of law259 and notifying all the wholesalers and sales agencies for their violation of law in writing. The KFTC
also filed a criminal complaint against the three companies and six individuals, including the heads of sales and marketing teams and school uniform business divisions.
2) Appeal and Administrative Adjudication
The three school uniform manufacturers and two of the individuals(“respondents”) appealed against the KFTC’s decisions. The KFTC however rejected their request for the review of the complaint measures due to its
inapplicability, and it also dismissed the rest of the appeals. 260 Major arguments of the respondents and the KFTC’s rulings will be discussed as below.
i) On the premise that the filing of a criminal complaint was an administrative action, the respondents argued that such action was out of or abuse of the discretion, citing the amount of profit and the activeness of the behavior. Regarding this, the KFTC ruled that the criminal complaint was just a clue to the investigation, not an administrative action that affected the rightsand obligations of the public, and thus it was not the subject of an appeal.
ii) The respondents argued that the central consultation committee had been voluntarily established and that they had attended the meetings simply as observers. Their arguments were not accepted on the ground that the committee was established for the purpose of collaborative acts, and the appealing parties actively participated in the activities as evidenced by the
agreement signed among the three companies and their meeting documents.
iii) Regarding the concerted determination and maintenance of the retail prices, the respondents argued that i) such act resulted from the benchmarking of the price of SK Global by Cheil Industries and Saehan, not the result of a price cartel; ii) it is difficult to view their agreement to freeze or
reduce the prices as an improper collaborative act because it contributed to enhancing consumer benefits; iii) their factory prices and the changes in such prices showed no correlation with price fixing; and iv) the heads of their teams
had not committed any act after having discussions. The KFTC did not accept all of these arguments.
iv) With respect to an act of collectively interfering with the business activities of other enterprisers, the respondents asserted that i) such act was voluntarily carried out by sales agencies as they felt a threat to their survival; ii) the
prohibition or restriction of free or promotional gifts was a voluntary conduct to prevent any disruption in the distribution order; and iii) collectively determining whether to open a shop in a department store or setting the level of commissions
paid to the department store was an inevitable act to respond to department stores in a superior position. All of their arguments were not accepted either.