Fair Trade Law Q&A - Resale Price Maintenance

What Is meant by "justifiable reasons" under the proviso in Article 19, Paragraph 1 of the Fair Trade Act, and which party bears the burden of proof?

Article 25 of the Enforcement Rules of the Fair Trade Act provides that "the justifiable reasons stated in the proviso of Paragraph 1 of Article 19 of the Act shall be determined by the competent authority on the basis of the evidence presented by participating enterprises and taking into account the following factors: (1) encouragement of downstream enterprises to enhance efficiency or quality of pre-sale service; (2) prevention of free-riding effects; (3) promotion of entries of new businesses or brands; (4) stimulation of competition between brands; (5) other reasonable economic grounds concerning competition. " Accordingly, an enterprise engaging in resale price maintenance ("RPM") shall affirmatively present evidence demonstrating that the RPM practice is justified. In other words, the enterprise bears the burden of establishing that its conduct is supported by a legitimate justification, and the competent authority will then evaluate the submitted evidence to determine whether the requirements of the proviso in Article 19, Paragraph 1 of the Fair Trade Act have been satisfied.