• Journal of Distribution Science
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• v.17 no.4
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• pp.5-16
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• 2019

Purpose - This study examines whether price cartel firms perform downward earnings management to avoid or minimize penalty surcharges levied by the Korea Fair Trade Commission and analyzes such earnings management in distribution industry. Research design, data, and methodology - We use 247 firms from 64 price cartel cases in the period of 2011-2016, and collect data from 3 years before to 3 years after the start of price cartel. Earnings management is measured by discretionary accruals. Three discretionary accrual estimation models are employed; modified Jones model, ROA adjusted modified Jones model and CFO-adjusted modified Jones model. For pre- and post-cartel periods, one year, two year, and three year windows are used. Additional empirical analyses are performed for distribution industry sub-sample of 25 cartel firms. Result - The regression results show that cartel firms' discretionary accruals are significantly lower in the period after the start of price cartel than before. And discretionary accruals are lower in cartel firms than in non-cartel firms during the cartel period. Cartel firms in distribution industry also show the earnings management similar to those in other industries. Conclusions - These two findings lead to the conjecture that managers of cartel firms manage their earnings downward. This behavior is indistinguishable between firms in distribution industry and other industries.

• Environmental and Resource Economics Review
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• v.12 no.4
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• pp.637-661
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• 2003

This paper analyzes the impact of import liberalization of petroleum product market in 1997 on the behavior of a domestic industry, regarded as a typical oligopoly. Based on the theory of implicit cartel, two regression equations were formulated and estimated for domestic production and refinery margin using monthly data for the period from Jan. 1994 to June 2003. Estimation results show that not only did domestic production rise sharply but also the refining cost fell substantially throughout 1996 before the actual liberalization of imports, Such a response is clearly consistent with the implicit cartel theory, which suggests that once the difficulty of maintaining a cartel in the future is recognized, the cartel immediately collapses and anticipation of import liberalization can cause immediately lowering market price as well as an immediate expansion of the supply by a domestic industry. However, the significant reduction of refinery cost accompanied by a large contraction in domestic output after the actual implementation of import liberalization can be explained by the collapse of implicit cartel caused by the anticipated liberalization of imports. Thus, import liberalization in the sense of allowing entry of foreign producers into domestic market has seemed to be an effective means to weaken market power and induce more competitive conduct of domestic firms.

• Environmental and Resource Economics Review
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• v.22 no.4
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• pp.727-757
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• 2013

This paper estimates the effects of Air Cargo companies' fuel surcharge collusion on the final airfreight prices. We show that the final prices have not been generally higher than the 'but-for prices,' and even been significantly lower for some companies. We analyze the possible reasons for such findings, and conclude that the collusion on fuel surcharges has not been successful due to the oil price hike in the cartel period. We also find that the oil price elasticities of fuel surcharges are significantly lower than 1.

• Asian Journal of Business Environment
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• v.11 no.4
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• pp.31-38
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• 2021

Purpose: This paper uses the resource-dependency theory to present the case of the Pakistan sugar industry to highlight how the industry uses a strategic alliance to gain a powerful bargaining position over its critical dependencies. The case of the Pakistan sugar industry is well-known and it is common knowledge that the alliance or the cartel within it is responsible for frequent price hikes and sugar supply shortages in the country. Research design, data and methodology: We use a case study, qualitative document analysis design to trace how the alliance overcomes its various dependencies, and in doing so, how does it harm various stakeholder interests. Results: This paper finds that the sugar industry alliance maintains its bargaining power by manipulating sugar supply through horizontal alliances, political affiliations, underselling and under-reporting sugar stocks, purchasing sugarcane from the black market, and by gaining billions of rupees in export subsidies by hoarding stock and using its political connections. Conclusion: The paper concludes by providing a summary of the measures which the government has taken to curb this anticompetitive conduct; the most important of which is the removal of protectionist measures for sugar trade and allowing market forces to control the demand and supply of sugar in the local market.

• The Korean Journal of Air & Space Law and Policy
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• v.30 no.1
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• pp.117-149
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• 2015

On May 16, 2014 the Supreme Court of Korea rendered its decision with respect to litigation filed by All Nippon Airways Co., Ltd. ("ANA") for revocation of an order of correction and payment of a penalty imposed by the Korea Fair Trade Commission ("KFTC"). On or around September 2002, ANA and various airlines operating air cargo service from Japan to Korea were allegedly to have agree to introduce of fuel surcharge into their rates on cargo fares in an attempt to recoup falling profits from rising of oil price. As this hard core cartel was per se prohibited under Korean competition law (The Monopoly Regulation And Fair Trade Act), KFTC began an investigation and consequently with fruitful results imposed an amount of penalty and issued an order of prohibition. ANA protested against this imposition by filing suit against KFTC under the reasons that (1) their agreement was simply pursuant to the relevant laws and regulations including Air Transport Agreement between Korea and Japan, (2) there was an administrative guidance from Japanese government to allow this agreement, (3) extraterritorial application of Korean competition law to the agreement in this matter was improper as it was made within Japan and targeted only for the shipment from Japan to Korea: accordingly there is not a direct and serious effect between the agreement and any result of anti-competitive. This article aims to review ANA's allegation and the judgement delivered by Korean court under some issues respectively; (1) whether there is an effectively actual anti-competitive cartel between airlines including plaintiff, (2) whether filed rate doctrine is reasonable and applicable in this case for precluding wrongfulness, (3) what is the reasonable limitation of boundaries in extraterritorial application of Korean competition law. Additionally, this article also suggests to concern particular features of air transport business as an regulated industry in judging the unfair restrain on competition.

• The Journal of the Convergence on Culture Technology
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• v.7 no.3
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• pp.285-292
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• 2021

In Sapiens it shows the reason that sapiens has conquered the earth for the invention of intersubjective reality. In Homodeus sapiens made the science revolution through the religion of humanism. The development of science showed that human free will and emotion is just made through the chemical interaction of neuron which can be manipulated and developed. Algorithm and data wlll be the sovereign which make decision in everything. Yuval Harari tells us the Homodeus appear and break down the order of equality. His anticipation proves right in competition law issues. The collusion through the algorithm makes it difficult to apply existing cartel logic. Agreement is the ground of responsibility but undertaking is not responsible in the market where sovereign algorithm decides eveything. Extreme price differentiation can appear and break down the existing market logic and competition dogma. Everything changes and it is necessary to have the flexible attitude and develop new logic.

• KDI Journal of Economic Policy
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• v.14 no.2
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• pp.55-75
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• 1992

At the outset of import liberalization, most economists expected a significant drop in the prices of domestic goods that faced foreign competition. However, it is now generally acknowledge that a significant drop in prices of those goods has not occurred. A common claim is that the prices did not drop significantly because the major importers of many imported goods were also the domestic producers of competing goods. The objective of this paper is to analyze the welfare effect of importation by domestic firms that produce competing goods, to identify the factors that facilitate such business practices, and to formulate a policy that could improve the welfare. We proved that importation by competing domestic firms definitely raises the prices of both imported and domestic goods compared to the situation where foreign goods are imported by non-producers, ceteris paribus. The intuition behind this result is that since a producer-importer is essentially a cartel, its overall profit maximization requires reduced competition between the products that it sells. On the other hand, if a producer-importer is more efficient at distrinbution than a simple importer, the comparison between the two cases is a priori indeterminate. We also find that the industries in which domestic producers are actively involved in importing competing goods are the ones in which the distribution channels are tightly controlled by importer-producers. This finding suggests that exclusive dealing contracts, which work as an entry barrier, may be the source of importing by domestic producers. We argue that in a country such as Korea, where financial market is highly incomplete, tight control of the distribution channels by oligopolistic manufacturers is likely to be an effective entry barrier that leads to importing by domestic producers of similar goods. We further argue that seemingly superior distribution costs of importer-producers is likely to be a result of market foreclosure which would disappear once the entry barrier of exclusive dealing contracts is removed. Above findings suggest that market imperfections are the source of importation by domestic competitors, which in turn constitutes a market imperfection in itself and reduces consumer welfare. As potential remedies, we considered three alternatives; direct price control by the government over the imported goods sold by major domestic producers, regulation of trade itself between major producers, and regulation of exclusive dealing contracts. For reasons both theoretical and pratical, we find that the last alternative is the most attrative. Prohibiting exclusive contracts between manufacturers and dealers in industries where exclusive dealing contracts are a significant entry barrier is expected to break up the importer-producer cartel and improve the welfare.

• Korean journal of communication and information
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• v.46
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• pp.627-670
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• 2009

This study analyzed Korean Fair Trade Commission's judgemental cases of cartels in telecommunications and media industry and presented the following results. First, cartels were formed frequently in multi-channel broadcasting industry, telecommunications industry, movie industry, and newspaper industry. In addition, price-fixing were observed in almost all subfield of telecommunications and media industry. Second, administrative guidance facilitated more opportunities for collusion in the telecommunications industry than in the media industry. Third, the telecommunications and media industry, similar to overall domestic industries, had a high proportion of hard-core cartels. Fourth, the depth of judgemental case in evaluating agreements among competitors was generally low, even though detail evaluations were found in the cases of large fines. Fifth, the overall level of sanctions was relatively low.

• The Korean Society of Law and Medicine
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• v.20 no.3
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• pp.175-209
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• 2019

The bundled discounting which the dominant undertakings engage in is problematic in terms of competition restraint. Bundled discounts generally benefit not only buyers but also sellers. Specifically, bundled discounts usually costs a firm less to sell multiple products. In addition, Bundled discounts always provide some immediate consumer benefit in the form of lower prices. Therefore, competition authorities and courts should not be too quick to condemn bundled discounts and apply the neutral and objective standard in bundled discounting cases. Cascade Health v. Peacehealth decision starts ruling from this prerequisite. This decision pointed out that the dominant undertaking can exclude rivals through bundled discounting without pricing its products below its cost when rivals do not sell as great a number of product lines. So bundled discounting may have the anticompetitive impact by excluding less diversified but more efficient producers. This decision did not adopt Lepage case's standard which does not require the court to consider whether the competitor was at least as efficient of a producer as the bundled discounter. Instead of that, based on cost based approach, this decision said that the exclusionary element can not be satisfied unless the discounts result in prices that are below an appropriate measures of the defendant's costs. By adopting a discount attribution standard, this decision said that the full amount of the discounts should be allocated to the competitive products. As the seller can easily ascertain its own prices and costs of production and calculate whether its discounting practices exclude competitors, not the competitor's costs but the dominant undertaking's costs should be considered in applying discount attribution standard. This case deals with bundled discounting practice of multiple healthcare services by the dominant undertaking in healthcare market. Under the Korean healthcare system and public health insurance system, the price competition primarily exists in non-medical care benefits because public healthcare insurance in Korea is in combination with the compulsory medical care institution system. The cases that Monopoly Regulation and Fair Trade Law deals with, such as cartel and the abuse of monopoly power, also mainly exist in non-medical care benefits. The dominant undertaking's exclusionary bundled discounting in Korean healthcare markets may be practiced in the contracts between the dominant undertaking and private insurance companies with regards to non-medical care benefits.