Fair Trade Law Q&A - Concerted Actions

What are the factors considered by the competent authority in granting an exemption for concerted actions?

  1. Pursuant to Article 16 of the Fair Trade Act, the Fair Trade Commission may, when approving or granting a concerted action, impose conditions or undertakings as part of such approval. The Commission is also required to specify a duration for each approval, which may not exceed five years. With justifications, the participating enterprises may apply in writing for an extension within the period of three to six months prior to the expiration of the approval term. Moreover, each extension shall not exceed five years. In order to address changing economic conditions and facilitate regulatory oversight, Articles 17 and 18 of the Act further provide that the Commission may revoke the approval, alter the contents of the approval, order the participating enterprises to cease or rectify the relevant conduct, or require the adoption of necessary corrective measures where the basis for approval no longer exists, economic circumstances have materially changed, the enterprises exceed the scope of the approved conduct, or the enterprises violate any conditions or obligations imposed pursuant to Article 16, Paragraph 1. The Commission shall also make public such approvals and related measures in the interest of transparency and public confidence.
  2. Consistent with the underlying purposes of the Fair Trade Act, the FTC evaluates applications for exemptions from the prohibition on concerted actions by balancing the procompetitive benefits for economy and public interest expected to result from the concerted actions against the potential anticompetitive effects and restraints on market competition. Approval may be granted only where the anticipated benefits outweigh the likely adverse effects on competition.
  3. Factors considered in evaluating overall economic and public interest include: the extent to which the concerted action may improve industry-wide technological capabilities; the anticipated impact on the pricing of goods or services; improvements in user convenience and safety; as well as other public benefits.
  4. Factors considered in evaluating restraints on competition include: projected analyses of cost structures and cost variations before and after implementation of the concerted action; the impact on enterprises not participating in the concerted action; the effects on market structure, supply, demand, and pricing; the impact on upstream and downstream enterprises and markets; whether the participating enterprises may abuse market power or market position; and whether the concerted action may improperly harm the interests of consumers or other relevant enterprises.

Relevant Provisions: Articles 15, 16, 17, and 18 of the Fair Trade Act