Fair Trade Law Q&A - Concerted Actions

Article 14 of the Fair Trade Act defines "concerted action" as conduct by competing enterprises at the same production and/or marketing stage, by means of contract, agreement or any other form of mutual understanding, jointly determine the price, technology, products, facilities, trading counterparts, or trading territory with respect to goods or services, or any other behavior that restricts each other's business activities, resulting in an impact on the market function with respect to production, trade in goods or supply and demand of services. The term "any other form of mutual understanding" includes a meeting of minds, other than formal contracts or agreements, regardless of whether legally binding or not which would in effect lead to joint actions. In addition, under Article 2, paragraph 2 of the Fair Trade Act, conduct by trade associations or other organizations that restricts the activities of enterprises through its charter, resolutions of general meeting of members, board meeting of directors, or other means likewise constitutes concerted action under the Act.

Based on the foregoing, the essential constitutive elements of concerted action under the Act include:

1. The existence of competing enterprises operating at the same level of production or distribution;
2. A contract, agreement, or meeting of minds among such enterprises, regardless of legal enforceability, that effectively result in coordinated conduct;
3. Conduct involving the coordination or restriction of competitive variables, including prices, quantities, technologies, products, equipment, trading counterparts, trading territories, or other business activities;
4. The purpose of restricting competition through mutual constraints on other business activities;
5. Conduct capable of affecting market functions relating to production, trade in goods, or the supply and demand of services.

Relevant Provision: Article 14 of the Fair Trade Act.