Fair Trade Law Q&A - Monopoly

Monopolies may arise as a result of legal restrictions, control over essential materials required for production, or cost structures characterized by substantial economies of scale over an extended range of production. Certain industries - such as public health or healthcare-related services, water utilities operated for administrative purposes, and petrochemical industries requiring significant fixed-cost investments in large-scale machinery and complex pipeline infrastructure - are therefore more likely to develop monopoly structures. Because monopoly positions may arise from legitimate or economic factors, their effects on the overall economy and consumer welfare are not necessarily negative in all circumstances. Accordingly, the Fair Trade Act generally adopts a neutral approach toward monopoly market structures. In other words, the Act does not prohibit the mere existence of a monopoly. Rather, it prohibits monopolistic enterprises from abusing their market power that impede fair competition. Therefore, the existence of a monopoly does not, by itself, constitute a violation of the Act.