Regulation of Undue Internal Dealings under the Monopoly Regulation and Fair Trade Act

Abstract

The prohibition of undue internal dealings under the Monopoly Regulation and Fair Trade Act (the MRFTA) is controversial from the perspectives of practitioners and academics as well. Many issues have recently been discussed and resolved by courts on undue internal dealing cases. This article presents a brief overview of the prohibition of undue internal dealings under the MRFTA by focusing upon the legislative intent and requirements for finding an internal dealing in violation of the Act articulated by relevant court interpretations.

To be sure, the prohibition of undue internal dealings under the MRFTA mainly aims at concentration of economic power by large business groups commonly known as Chaebol. The actual legislation, however, is not consistent with the intents of the legislators, which creates unnecessary confusion in enforcing the prohibition of undue internal dealings and sometimes misleads the court in ruling on each case.

To cure those problems and secure a clear standard in enforcing the prohibition of undue internal dealings, legislative improvement is called for. Among others, it should be positively considered to provide for the prohibition of undue internal dealings as a measure to repress concentration of economic power under the Chapter 3 of the MRFTA. This will ensure the consistency between the legislative intent and the statutory regulation of undue internal dealings, and thereby enable the enforcers with the competition authority and practitioners to avoid unnecessary confusion on the prohibition of undue internal dealings.