. /.WORLD TRADE
ORGANIZATIONWT/WGTCP/W/144
2 August 2000
(00-3166)
Working Group on the Interaction
between Trade and Competition PolicyOriginal:  English
COMMUNICATION FROM THE REPUBLIC OF KOREA
The following communication, dated 13 June 2000, has been received from the Permanent
Mission of the Republic of Korea with the request that it be circulated to Members.
_______________
Korea Fair Trade Commission:  Competition Advocacy Role
1. Competition advocacy refers to all the efforts aimed at establishing the principles of a market
economy in the government decision-making, enforcement, and deregulation processes.  This includesurging public enterprises and corporations underg oing privatization to undertake restructuring
measures in a pro-competition manner and eliminating economic regulations that reduce consumer
welfare.
2. In order to play an effective competition advocacy role, competition authorities should be
equipped with the necessary resources and authority.  In addition, they should be able to take part in
the government decision-making process in a timely fashion.
3. In this regard, the Korea Fair Trade Commission (KFTC) not only holds the characteristics
needed to be an effective competition advocate, but also offers other important capabilities as well.
4. First, the KFTC is entitled to have prior co nsultations with relevant government agencies
concerning legislation.  Pursuant to Article 63 of the Monopoly Regulation and Fair Trade Act, the
head of a pertinent administrative agency shall s eek consultations with the KFTC in advance when
he/she intends to enact or amend any act or decree, issue an authorization or take other measures thatcontain anti-competition elements.  As such, Korea's general competition law only stipulates the
competition advocacy role of the competition authorities.  Such a role is deemed one of the core
functions of the KFTC.
5. Second, the Chairman of the KFTC can sit and voice his opinion in Cabinet Meetings.
Policies, once formulated, are difficult to change.  In this regard, the KFTC Chairman can ensure thatthe views of the competition agency are reflected in the policy-making by attending and expressing
his opinions at the Cabinet Meetings.  Based on the authority and capacity provided by law, the KFTC
has successfully fulfilled the role of a competition advocate.
6. With respect to the consultations on legislation, in the past three years, the KFTC has put
forth its opinions on 403 (31.9%) of the 1264 requests made by relevant government agencies for theenactment and revision of legislation.  Of that, the KFTC's views and suggestions were reflected in
310 (76.9%) of those changes in legislation.  As such, the KFTC has helped oppose and prevent theWT/WGTCP/W/144
Page 2
introduction and amendment of anti-competition legislation, thereby achieving, in effect, regulatory
reform.
7. The following are some of the KFTC's major achievements as a competition advocate:
(a) Since 1997, it has taken measures to improve institutions and practices to prevent
monopolistic or oligopolistic market structures in 20 sectors, including automobiles,steel and tyres.
(b) In February 1999, the Omnibus Cartel Repeal Act was enacted.  This resulted in the
elimination or improvement of 20 cartels, including those that set the remuneration
for 9 professional occupations, which in cluded lawyers and professions that were
subject to group negotiations among small and medium-sized enterprises (SMEs).
(c) The KFTC also has a keen interest in the privatization of state-owned enterprises
(SOEs).  Privatizing backbone industries that operate under state monopolies couldhelp produce private monopolies instead of state monopolies.  In recognition of this
possibility, the KFTC has actively pursued pro-competition policies, including those
that promote deregulation.
8. The OECD Review of Regulatory Reform in Korea found that the KFTC has played a crucial
role in establishing two essential principles of reform:  reliance on the market mechanisms andopenness.
9. The experience of the KFTC as a competition advocate has two implications.  First, countries
that pursue an economic policy focused on industrial policy are likely to breed anti-competitive
governmental regulations.  This was the case with Korea, where a government-driven growth strategy
was adopted and anti-competition regulations established.  Though this could be overlooked at theinitial stage of development, it eventually distorted market structures and negatively affected
economic development.  The lesson is that every effort to build a market economy should be
undertaken in the initial stage of development.  This can be achieved through the introduction of
competition policies, with the competition authorities taking on an active competition advocacy role.
Second, it is critical to confer full authority to compet ition agencies to allow them to serve as effective
competition advocates.  Because developing countries, in particular, are facing special challenges in
the promotion of a free market, the role of such competition advocates is essential to overcoming
those challenges.
__________