Merger review

Powers of competition authority

Does the competition authority have the same authority with respect to reviewing mergers involving IP rights as it does with respect to any other merger?

Yes, the KFTC has the same authority with respect to reviewing mergers involving IP rights as in other mergers. According to the KFTC’s IP Guidelines, article 7 of the MRFTA, which provides restrictions on business combination, similarly applies to mergers involving IP. The IP Guidelines also provide that article 7 of the MRFTA can apply to any transfer or acquisition of IP rights that are considered a material part of the business, or to any exclusive licence agreement that has the same effect as the transfer or acquisition of such IP rights.

Analysis of the competitive impact of a merger involving IP rights

Does the competition authority’s analysis of the competitive impact of a merger involving IP rights differ from a traditional analysis in which IP rights are not involved? If so, how?

No. The same standard for review applies regardless of whether or not the merger involves IP rights.

Challenge of a merger

In what circumstances might the competition authority challenge a merger involving the transfer or concentration of IP rights? Does this differ from the circumstances in which the competition authority might challenge a merger in which IP rights were not a focus?

The KFTC may challenge a merger involving the transfer or concentration of IP rights if such transfer or concentration has substantial anticompetitive effects. The standards governing mergers remain the same, regardless of whether such a transfer or concentration involves IP rights.

Remedies to address the competitive effects of mergers involving IP

What remedies are available to address competitive effects generated by a merger when those effects revolve around the transfer of IP rights?

The KFTC may first order the divestiture of IP rights or the assignment of a related business, but if such measures are unable to relieve the anticompetitive effects, the proposed merger could be suspended or nullified. A compulsory licence may also be imposed. The KFTC has previously imposed a remedy to enter into a licence agreement with specified content to a patent owner that had refused to grant a licence or had offered unfair licensing terms constituted an unfair trade practice.