Kang: “KOBACO’s Exclusive System Must Be Reformed”

A so-called “package regulation law” will fix 174 regulations including the screen quota system and the ban on differentiated commissions that restrict competition.

“The Fair Trade Commission (FTC) will focus on reforming the 174 regulations that limit competition this year,” said Chairman of the Korea Fair Trade Commission Kang Chul-kyu at a regular briefing. “A new law for regulating cartels is under consideration.”

Kang named the fields in which reforms are necessary: the screen quota system, the ban on differentiated commission of securities, the monopoly of the Korea Broadcasting Advertising Corporation (KOBACO), the medical supply purchasing practices of general hospitals and the ban on parallel imports.

The FTC found 174 regulations that restrict competition in 23 organizations and consulted the Korea Society for Regulatory Studies. As a result of the consultations, the FTC decided to abolish 95 regulations (55 percent) and reform 57 others (33 percent).

Another 22 regulations were classified for additional study. They require certain regulation.

“It was among the 174 regulations,” said Kang in reference to the controversial screen quota. “I cannot reveal, however, which it belonged to: abolishment or reformation.”

He added that “a ban on graded commissions that force securities corporations to apply different commissions to different clients is limiting price competition. It has to be reformed.

“The only company that can import foreign goods directly is the one that has the sole right of use of the foreign trademark right. It is a monopoly,” he said regarding the ban on parallel imports.

KOBACO has a monopoly on selling advertising time on TV and radio stations under the present system. “The system blocks competition in the advertising market,” said Kang. “It needs to be changed.”

Kang also mentioned the policy towards large corporations. “A revised Fair Trade Law that includes regulation of the total amount of investment will be drawn up during the first half of the year,” he said.

Ki-Jeong Ko koh@donga.com