FTC approves a partial cartel, South Korea

FTC approves a partial cartel, South Korea
Published: 22 January 2010

In an extremely rare decision, Korea’s antitrust agency partially approved a request yesterday to allow several hundred small and midsize ready-mixed concrete companies to form a cartel.

The Fair Trade Commission said it would let the companies jointly manage product quality and conduct research and development for the next two years. The commission said it approved the request to help concrete companies overcome the economic downturn and to promote restructuring within the industry, though the businesses said they are “disappointed” by the limitations of the decision.

It marks the first time the FTC has approved such a move to form a cartel in 22 years.

The decision was a response to a request made last September by 338 ready-mixed concrete companies and 11 related associations in the country. They originally asked for permission to jointly purchase raw materials, distribute concrete, manage product quality and conduct research and development. The antitrust agency, however, only approved the latter two portions of the request.

“There are more negative effects of limiting competition from joint procurement and sales than positive effects of improving competitiveness,” Chae Kyu-ha, an official at the cartel department of the agency, said in a statement.

“However, jointly managing quality and conducting research and development does not limit competition, so it was approved.”