Article 24 of the Fair Trade Law (hereinafter, "Article 24") is a general provision. These Guidelines are specially promulgated to facilitate its concrete and clear-cut application.
 

2. (Basic spirit of the application of Article 24) 

To clarify the distinction between Article 24 and related provisions of other laws and regulations such as the Civil Code and the Consumer Protection Law, the requirement of "sufficient to affect trading order" should be the first criterion applied when screening for the applicability of the Fair Trade Law or Article 24. In other words, the Commission will review a case under Article 24 only if the act at issue is sufficient to affect trading order in the market. If the requirement of "sufficient to affect trading order" is not met, remedy should be sought under the Civil Code, Consumer Protection Law, or other laws or regulations. 

On condition that the requirement of "sufficient to affect the trading order" is met, then, to ascertain the scope governed by Article 24, it is necessary to examine whether the alleged illegal practice could not be not fully corrected by, first, provisions concerning restrictive competition (e.g. monopoly, cartel, and vertical restraints on competition) and, second, provisions concerning unfair competition (e.g. commercial imitation, false advertising, business defamation). Thus, the distinction in the application of Article 24 and other articles of the Fair Trade Law is that Article 24 is applicable only as a supplementary provision, i.e. applicable only to acts that are out of the reach of other articles of the Fair Trade Law. 

If a certain unlawful act is caught by other provisions in the Fair Trade Law, meaning either that the application of those specific provisions could fully establishes the illegality of the act, or the illegal contents of the alleged act could be exhaustively regulated by those provisions, there are no grounds for the supplementary application of Article 24. Conversely, only if those specific provisions fail to evaluate the alleged unlawful act in its entirety will there be room for the supplementary application of Article 24. 

With respect to the issue of "protecting consumers interest," the applicability of Article 24 will be determined by examining whether the enterprise concerned is abusing its advantageous position to use "deceptive" or "obviously unfair" sales tactics to harm consumers' interest, and the requirement of "sufficient to affect trading order" has accordingly been met. 
 

3. (Clarification of overlapping laws) 

The application of Article 24 frequently gives rise to the question of overlapping with other laws, and should be resolved according to the following factors: 

(1) Contracts between enterprises or enterprises and consumers are trade terms agreed upon by both parties out of their own free will. Regardless of whether their contents are obviously unfair or whether they are subsequently performed, contractual behavior should in principle be regulated by contract law. Article 24 is applicable only in exceptional circumstances where the behavior threatens the competitive order or market trading order. If obviously unfair content of a contract fails to meet the requirement of "sufficient to affect trading order," it should be resolved through civil remedies proceedings. Only if this requirement is met and public interests are at stake should Article 24 be invoked. 

(2) Although protecting consumers' interest is among the legislative purposes expressly set forth in Article 1 of the Fair Trade Law, it is necessary to distinguish between the core legal interests protected by the Fair Trade Law and those protected by the [Consumer Protection Law]. Article 24 should be invoked only in cases where the requirement of "sufficient to affect trading order" is met and where, moreover, the conduct by nature has a bearing on the public interest. Examples would be where an enterprise's relatively advantageous market position vis-a-vis its consumers is so endemic to the industry that consumers' interest is harmed due to over-reliance or the lack of alternatives. . 

(3) Owners of intellectual property rights are entitled under relevant intellectual property laws to inform whoever might have infringed their rights to terminate the infringements. However, if prior to any confirmation and notification proceedings being undertaken, the owner makes outright oral or written representation directed at its competitor's distributors or consumers (trading counterparts or potential trading counterparts) alleging that a competitor has infringed its rights or interests, and provide no basis for the recipient to form a reasonable judgment, constitute an abuse of intellectual property rights to create unfair competition, and are governed by Article 24. The prerequisite for invoking Article 24 with respect to oral or written warnings regarding intellectual property rights is the improper exercise of such warnings that could lead to unfair competition. Whether the Fair Trade Law has been violated should be determined merely by whether in formality the proper procedures have been followed for exercising such rights, and will not include the consideration of whether any infringement has actually occurred. 

4. (Distinctions of the applicability of Article 24 vis-a-vis other articles of the Fair Trade Law) 

Application of Article 24 should be guided by the principle of supplement meaning that Article 24 is applicable only to unlawful acts that could not be completely covered by the other articles of the Fair Trade Law. If a certain unlawful act could be completely covered by the other individual articles of the Fair Trade Law-that is, if the illegality of alleged acts could be comprehensively evaluated or exhaustively regulated by those articles-then those articles will take precedence and there are no grounds for supplementary application of Article 24. Conversely, if those articles fail to regulate the illegality of the act, Article 24 may then come into play. 

5. (Factors to be considered in determining "sufficient to affect trading order") 

"Trading order" as used in Article 24 refers to trading behavior that comports with good moral ethics of society and business competition ethics centered on efficient competition. Its concrete content is the type of trading order that is in conformity with social ethics, and upon which the spirit of free and fair competition rely. When determining "sufficient to affect trading order," consideration should be given to whether it is sufficient to affect the overall trading order (e.g. the number of victims, the quantity and degree of harm caused, the deterrent effect on other enterprises, and whether specific organizations or groups have been targeted by the alleged deceptive or patently unfair acts) or whether the case would affect a majority of future potential victims before invoking Article 24; however, the trading order has in fact been affected is not required. For single, individual, non-recurring trade disputes, on the other hand, civil remedies should be pursued rather than the application of Article 24. 

6. (Factors to be considered in determining "deceptive") 

"Deceptive" as used in Article 24 refers to acts of engaging in trade with trading counterparts by misleading them through active deception or through passive concealment of material trading information. 

"Material trading information" as used in the preceding paragraph refers to the important trading information sufficient to affect trading decisions. Whether an act is "misleading" should be determined by whether objectively there is a reasonable likelihood (and not merely some possibility) that it would mislead the general public or deceive trading counterparts, together with the evaluation of trading counterparts' ability of judgment based on the "reasonable judgment" standard (An extremely low level of care should not be taken as the standard.) Common types of such acts include: 
(1) Impersonating or free riding on the credibility of another entity. 
(2) Disingenuous sales tactics. 
(3) Concealing material trading information.
 

7. (Factors to be considered in determining "obviously unfair") 

"Obviously unfair" as used in Article 24 refers to engaging in competition or commercial transactions by obviously unfair means. Its most common and concrete types fall into three general categories: 

(1) Unfair competitive conduct contrary to business competition ethics 

(i) Exploiting the fruits of others' work

The determination of illegality should in principle consider the following factors: 
(1) the work that have been free ridden upon or imitated to a substantial degree must be those that the enterprises have already exerted a substantial degree of efforts in those work and thereby created a certain economic interest in them that had already been exploited by the alleged free-riding or imitating acts; and 
(2) the free-riding or imitating acts could mislead trading counterparts into believing that the goods or services come from the same source or product line or an affiliated enterprise. However, even where the above two criteria are not met, a violation may still be found in cases where the means employed are highly reprehensible (e.g. complete imitation), and determination should be made based on the various facts in each individual case. Common types of such conduct are as follows: 

(a) Free riding on the business reputation of another:
Determination of whether business reputation is protected by Article 24 should take into account of whether it is a substantially well-known brand in the market and whether it would create quality connection among related enterprises or consumers in the market. 

(b) Imitation to a substantial degree: 
Determination of imitation to a substantial degree should examine in totality (1) whether the imitation reaches the level of "exactly alike" or "highly similar"; (2) the relevance and proportionality between the efforts exerted and cost incurred by the imitator and its resulting competitive advantage or benefit; and (3) the uniqueness and state of possession of the imitated work in terms of market competition.

(c) Acts of taking advantage of the work of another person to promote one's own goods or services. 

(ii) Obviously unfair conduct resulting from non-transparency of information.