Global economy and competition law enforcement

By Jeong Jae-chan

FTC Chairman Jeong Jae-chan

Just as transparent and strictly enforced rules are required for a fair sports game, establishing order for competition is essential for the global economy where competition is no longer limited by borders. The number of countries that have adopted the laws of competition has increased to about 130. Also, there has been a rise in enforcement taken against players across the globe who have not played by the rules.

More countries are introducing rules to regulate and enforce the conduct of companies taking place outside their territorial jurisdiction. Based on the principles of extraterritorial jurisdiction, many competition authorities are strengthening enforcement against extraterritorial anti-competitive practices that affect their domestic markets. Since the establishment of competition laws in 2008, China has adopted the principles of extraterritorial jurisdiction and has been rigorously enforcing its anti-Monopoly laws against international firms. Also in the United States, 116 out of 132 firms have been fined more than 10 million dollars each for breaching U.S. competition laws. These are companies with headquarters outside the United States. Likewise, other competition authorities of other countries are thoroughly examining the impact of overseas violations within their jurisdictions in order to expand the extraterritorial application of competition laws. The Korea Fair Trade Commission (KFTC) has also been investigating any anti-competitive conduct that affects the domestic market regardless of whether the violator is local or foreign. As of 2016, the KFTC has sanctioned companies from approximately 20 countries for violations of competition laws.

For international firms, stronger enforcement of competition laws around the world could provide them greater opportunities to expand their businesses overseas as well as exposing them to higher chances of being investigated by authorities for infringement of the laws. Most of the companies that do not infringe on the competition laws would benefit from stronger antitrust law enforcement. Active sanctioning against anti-competitive conduct will deter such practices that hinder market entrance and will eventually be helpful for the development of the industries.

Consumer benefit is another reason for stronger enforcement of competition laws in the global economy. Price fixing among foreign competitors could raise domestic prices. Therefore, extended enforcement of the competition laws protects consumers from financial losses. In addition, competition globally could help provide consumers with better services and products.

At a moment in which competitive order is being established worldwide, businesses that are actively participating on the global stage need to re-examine their risks from stronger enforcement of the competition laws. If a single violation has an anti-competitive impact in several countries, the violator will be investigated and sanctioned in multiple jurisdictions. Thus, businesses need to pay closer attention and make extra efforts to play by the rules not only at home but also abroad.

Jeong Jae-chan is chairman of the Fair Trade Commission