2. Findings
1) Formation of An Organization for Cartel Implementation
i) Engaging in the business of manufacturing and selling school
uniforms, SK Global Co., Ltd., Cheil Industries Inc., and Saehan, Co., Ltd.(hereinafter the “three school uniform manufacturers”) recognized that it was necessary to establish a consultation body to maintain the retail price of their
products and to refrain from competition in offering free or promotional gifts. Accordingly, after September 1998, the three school uniform manufacturers tried to establish a consultation meeting for each region in cooperation with their wholesalers and sales agencies.
ii) The three school uniform manufacturers (sales and marketing
managers) had meetings with 20 representatives of their wholesalers and sales agencies at Chateau Grace Hotel in Daejeon on November 13 and 17, 1998 and agreed to organize regional consultation committees of the wholesalers and sales agencies and a nationwide committee of regional representatives in
order to prevent excessive price cuts and free or promotional gifts.
iii) In addition, 20 participants, including the sales and marketing managers of the three school uniform manufacturers and representatives of their wholesalers and sales agencies, established the National School Uniform Business Development Consultation Committee (hereinafter the “central
consultation meeting”) at the Chateau Grace Hotel in Daejeon on December 24, 1998. The central consultation committee consisted of the wholesalers and sales agencies of the three school uniform manufacturers, with its 20 founding participants and eight executives equally allocated among the three companies
and regions.
iv) Following the agreement to form the regional consultation
committees in addition to the central consultation committee, 60 regional consultation committees were established throughout the country after November 1998 in order to carry out concerted activities by frequent business contacts. The Daegu & Geongbuk Consultation Committee and the Ulsan Consultation Committee even drew up their articles of incorporation to govern their activities.
2) Collaborative Act of Fixing, Maintaining, or Changing the Retail Price of School Uniforms
i) Chung OO, the head of the Smart Team of SK Global, Chang OO,
the head of the Ivy Club Team of Cheil Industries, and Hong OO, the head of the student uniform team of Saehan, agreed to support the activities of the central and regional consultation committees, and signed an agreement on December 4, 1998 as follows.
ii) After signing the agreement, the three school uniform makers
ordered or encouraged their wholesalers and sales agencies to determine the selling price of their school uniform products collectively through the regional consultation committees, or they received reports of the agreed price of each region and violations of such agreements.
iii) In addition, the three companies held meetings, or their executives of the central consultation committee had meetings more than 10 times before the sale of summer and winter uniforms in 1999 and 2000 and the sale of winter uniforms in 2001. Moreover, they monitored the progress of regional
consultations and discussed actions against agencies that violated the agreements at the regional level. They also agreed to set the school uniform prices at certain levels, depending on the characteristics of each region.
iv) In response to the order, encouragement, and monitoring by the three makers, the agencies that resold their products collaboratively determined the retail price of student uniforms.
v) The three manufacturers also set the standard resale prices and notified their wholesalers and sales agencies these prices, thereby to implement it as the standard for a price agreement. They either informed their distributors of a price tag (which includes the price for wholesalers and sales
agencies in the case of SK Global, the factory price in the case of Saehan, and the factory, wholesale, and retail prices in the case of Cheil Industries), or concluded an agreement on a sales margin for each agency. By doing so, the school uniform manufacturers instructed their sales agencies to determine the
retail price jointly through each regional consultation committee.
3) Act of Interfering with the Business Activities of Other Entrepreneurs
i) When the parents of Dowon Middle School students purchased school uniforms collectively at an inexpensive price through public bidding(“cooperative purchase”) in October 1998, the three school uniform makers jointly sought countermeasures to prevent such cooperative purchase, in collaboration with the central consultation committee, and hampered the cooperative purchase effort through their central and regional consultation committees.
ii) The three school uniform manufacturers had meetings attended by their team leaders and representatives of wholesalers and sales agencies on November 13 and 17, 1998, and agreed to ban or restrict sales agencies from providing free gifts to customers who purchase their products and promotional
gifts to consumers. At the meeting of team leaders on December 31, 1998, the three makers agreed to stop offering free gifts to customers and take actions against the agencies that violated this agreement.
iii) The three school uniform manufacturers agreed to set the commissions paid to department stores below 13% at the meeting of team leaders on December 31, 1998, and had a meeting to discuss non-compliance with such decision on the commissions with the central consultation committee executives on January 26, 1999. At this meeting, the participants also agreed that regional consultation committees would discuss with the
central committee whether to open a shop in the department store and make a decision jointly. As a result, the regional consultation committee in Honam region decided that the sales agencies in the region would not open a shop in department stores.