The case at issue is significant in terms of its long duration and considerable
scale involving as many as twenty-one (21) carriers from sixteen (16)
countries while implementing cartel schemes for up to seven (7) years. The
damages from the cartel was enormous with affected sales estimated at KRW
6.7 trillion, equivalent to about twenty five-percent (25 %) of Korea's total
volume of export cargo in 2009. It was found that the cartel seriously
undermined the export competitiveness of domestic industries. In addition,
price fixing on inbound shipments to Korea had adverse effects on the welfare
of end-consumers, as the increased rates were directly paid by domestic
consumers or reflected in import cargo prices.
4) Background for launch of KFTC investigation
The cartel at issue was continuously in effect for an extended period from
around 2000, until it was first uncovered, as some participating companies
filed an application to the KFTC for leniency. Upon receiving the applications,
the KFTC launched an investigation into the alleged conspiracy, and began
investigation in coordination with multiple jurisdictions as the companies
involved were headquartered in multiple foreign countries.
For example, on February 14, 2006, the KFTC simultaneously carried out a
dawn-raid across the world along with its counterparts in the U.S and EU. The
case required a considerable amount of time for investigation and review- it
took three (3) years to analyze vast amounts of evidential materials and written
documents obtained from dawn-raids and submissions by respondents. In the
process, the KFTC summoned fifty-four (54) executives and employees of the
carriers involved including thirteen (13) foreigners to take their statements. It
also closely cooperated with foreign competition authorities of the U.S and EU,
etc., through bilateral discussions, conference calls and emails to share
progress and direction projections in handling the case.
3. The KFTC’s decision
1) Enforcement of MRFTA on foreign companies
The KFTC assessed whether carriers based in overseas countries were
qualified to become respondents in the cartel case at issue. It determined that
those companies were considered enterprisers pursuant to Article 2 Item 1 of
the MRFTA (before amended by Law No. 8631 on August 3, 2007).
That is because the MRFTA "seeks to promote fair and ① free competition
such that creative enterprising activities are fostered, to protect consumers, and
to strive for the balanced development of the national economy by preventing
improper cartels" (Article 1) and ② defines an enterpriser, which is a subject
of a cartel, as "a person who operates a manufacturing business, a service
business, or any other business" not limiting it to domestic companies (Article
2), and ② cartels carried out by foreign companies in foreign countries should
be subject to the MRFTA, if they affect the domestic market, to meet the
aforementioned purpose of the Act, so ④ if targets of a cartel include the
domestic market with actual adverse effects, even if the act occurs overseas
and among foreign companies, the MRFTA applies to the cartel to the extent
the cartel agreement affects the domestic market. Therefore, foreign
companies established in accordance with foreign laws whose main offices are
located in foreign countries should be considered enterprisers subject to the
MRFTA.
2) Ruling on illegality of cartel acts
The KFTC determined that the act of agreeing to introduce and raise fuel
surcharges in a similar period of time constituted the "act of fixing,
maintaining or changing prices" according to Article 19 Paragraph (1) Item 1
of the MRFTA on the grounds that ① fuel surcharges are the payment carriers
collect from forwarders or shippers for their airfreight service and thus, ② the
agreement to introduce or change fuel surcharges has an effect of practically
raising the price of such services.