The Korea-EU FTA : Implications for the Enforcement of Korean and European Competition Law

On 1 July 2011 the Free Trade Agreement between the European Union and the Republic of Korea will become effective. The pact dedicates Chapter 11 to competition and requires the contract parties to undertake to apply their respective competition laws so as to prevent the benefits of the trade liberalization process in goods, services and establishment from being removed or eliminated by anti-competitive business conduct or anti-competitive transaction, and to remedy or remove distortions of competition caused by subsidies. This article is an investigation on the impact of the Korea-EU FTA for Korean and European competition law enforcement. It shows that the FTA contains enforcement rules that go beyond the “Competition Agreement” between Korea and the European Community of 2009. Accordingly, Chapter 11 FTA broadens the scope of matters which now are subject to “prompt discussion” in consultation procedures between Korea and the EU at the request of either party. Furthermore, as far as the competition matter concerns subsidies, the full range of dispute settlement mechanisms under the WTO Agreements remains available. This article also argues that rights under Chapter 11 FTA can be enforced by individually concerned European companies (i.e. private enforcement) under the European “Trade Barrier Regulation”. It has been established by prior proceedings under the Trade Barrier Regulation that subsidies can amount to an obstacle to trade with adverse effect on a European company operation in Korea, and the Trade Barrier Regulation has already been an effective tool for companies to initiate an investigation by the European Commission against alleged unlawful subsidization of Korean companies under the WTO Agreements. It will therefore serve as such a tool when facing stricter rules on subsidies of Chapter 11 FTA. As far as other anticompetitive actions are concerned, the Trade Barrier Regulation will also be available in principle, but its final measures will be limited to cooperation and consultation procedures outlined in Chapter 11 FTA