Shearman & Sterling Antitrust Annual Report 2019

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Page 76 of 147

S H E A R M A N & S T E R L I N G L L P | 7 5 K F T C I S R E G A R D E D A S O N E O F T H E R E G I O N ' S T O U G H E S T A N D M O S T A C T I V E C O M P E T I T I O N A U T H O R I T I E S Japan has also launched an e-commerce sector inquiry to examine how to create a domestic e-commerce policy that will enable it to promote competition while protecting data security and ensuring transparency. This follows its recent changes to the Distribution Guidelines in 2016 showing that the JFTC is quick to amend its rules to deal with online transactions. SOUTH KOREA Korea's Fair Trade Commission (KFTC) is regarded as one of the region's toughest and most active competition authorities. In 2018, the KFTC published proposed changes to the country's competition laws. Among the key changes is the abolishment of the KFTC's exclusive right to make criminal referrals. To that end, KFTC chairman Kim Sang-Jo and the country's justice minister signed an agreement to begin sharing concurrent jurisdiction over cartel conduct. The KFTC also proposed doubling the maximum fines for price-fixing, abuse of dominance and unfair trade practices. The legislation, if enacted, would also add information exchange as a new type of prohibited practice. The proposed legislative changes include enhanced regulations for conglomerates. Thus, it is expected that the KFTC will be more proactive and aggressive in its enforcement against abusive conduct or unfair trade practices, with a particular focus on abusive conduct by dominant South Korean conglomerates (chaebols). The KFTC has also signaled its intent to increase investigations into anti-competitive subcontracting and distribution practices in order to protect and support growth among small and medium-sized companies. South Korea is also undergoing an initiative related to the development of policies in the e-commerce sector similar to the inquiry being performed in Japan, although the efforts are not part of the official KFTC agenda. Additionally, it is believed the KFTC is probing possible abuses of dominance by Google in the mobile gaming industry by forcing Korean gaming businesses to launch their programs exclusively on Google's Play Store and Korean search engine Naver over accusations that it blocked rivals on its shopping search service. Effective February 27, 2019, the KFTC amended its merger review guidelines introducing new standards for reviewing mergers involving innovation and big data. The guidelines define 'big data' as 'information assets' and provide a framework for defining 'innovation market.' Among the amendments, the guidelines now provide alternative criteria for assessing market concentration and the competitive effects of mergers in innovation markets. In addition to the existing general factors to assess the anti-competitive effect, the guidelines provide additional criteria to assess the competitive effects of a merger involving big data. Though the amendments signal an effort to provide a more accurate assessment of competition concerns for innovation mergers and mergers involving big data, the KFTC has yet to provide further guidance on how the guidelines would be applied. Absent further clarification from the KFTC regarding application of the guidelines, it is difficult to predict exactly how the new criteria will actually affect future merger reviews.

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