FTC to Tighten Regulations on Monopoly Price Abuse
If a monopolistic firm—one that dominates a market alone or together with others—charges domestic prices higher than those abroad, or keeps prices unchanged even as costs fall, it will immediately become subject to sanctions. Announcing the measure, aimed at easing the burden of consumer prices, the Fair Trade Commission said Tuesday it will pre-announce a revised enforcement decree of the Fair Trade Act containing these provisions until the 16th of next month.
The revision is intended to update the clause banning abuse of market dominance, untouched since 2001, to reflect changed economic conditions, and to lower the threshold of elements regulators must prove to punish price abuse.
The criteria for judging price abuse will change. The current enforcement decree uses only 'costs required for supply' as the comparison benchmark, but going forward, unfairness can be assessed by comparison with 'prevailing external price levels.' Setting domestic prices unfairly high relative to overseas markets, or raising prices immediately when costs rise while refusing to lower them when costs fall, will fall under regulation. The 'marked' requirement for establishing price abuse has been relaxed to 'considerable.'
Regulations on practices that obstruct business activities will also be strengthened. Four types of conduct that have generated much enforcement—refusal to deal, presentation of conditions without valid grounds, discriminatory pricing and trading terms, and coercion of disadvantages—have so far been set out only in notices with limits on legal interpretation, and will now be elevated into the enforcement decree. New types of obstruction will also be created to complement the limits of the current rules, which are tailored to manufacturing. 'Anticompetitive tying,' which is banned under the current unfair trade enforcement decree but absent from the market dominance abuse decree, will be added as a separate category.
During the pre-announcement period, the FTC will review opinions from stakeholders and relevant ministries, then complete the revision of the enforcement decree within the first half of next year after undergoing review by the Ministry of Government Legislation.
