Fair Trade Law Q&A - Other Restrictive Trade Practices

Subparagraph 2 of Article 20 of the Fair Trade Act prohibits an enterprise, without justifiable cause, from engaging in discriminatory treatment toward another enterprise where such conduct is likely to restrain competition. Moreover, pursuant to Article 26 of the Enforcement Rules of the Fair Trade Act, whether justifiable cause exists shall be determined on a case-by-case basis after considering the following factors:

1. Market supply and demand conditions:
   For example, where products are seasonal or perishable in nature, an enterprise may offer special discounts for products nearing the end of the sales season or withdrawal from the market in order to clear inventory or accelerate sales.
2. Differences in cost:
   For example, where differences in transportation, packaging, marketing, or other costs justify different discounts or trading conditions.
3. Transaction volume or purchase amount:
   For example, where an enterprise offers greater quantity discounts to customers placing large-volume orders or making higher-value purchases.
4. Credit risk:
   For example, where an enterprise offers more favorable prices or payment terms to long-standing customers or customers with superior credit ratings.
5. Other reasonable grounds:
   For example, where an enterprise offers lower supply prices or preferential pricing to charitable organizations for public-interest reasons, or where different treatment is provided based on the degree of cooperation of a trading counterpart.

Relevant Provisions: Article 20 of the Fair Trade Act; Article 26 of the Enforcement Rules of the Fair Trade Act