Logger Script

13 Oct 2011

Representing SK Telecom, Dispute Resolution and Antitrust Teams Win Long-running Abuse of Dominance Case

Yulchon, representing SK Telecom in an abuse of market dominance case that took nearly five years to resolve, obtained the cancellation of a corrective order and fine that the Korea Fair Trade Commission had imposed on the telecommunications company.

The case revolved around the issue of whether SK Telecom, one of the largest players in both the mobile telecommunications and music file downloading markets in Korea, had abused its dominance. The KFTC found that SK Telecom's digital rights management (DRM) technology prevented its MP3 phone users from purchasing music files from any site but Melon, SK Telecoms' music downloading website. Ruling that these actions impeded other service providers' business activities and increased consumer costs, the competition authority issued a corrective order and imposed a fine on SK Telecom in early 2007.

Yulchon challenged the ruling and penalties in court. The case eventually made its way to the Seoul High Court, which accepted Yulchon's arguments that (i) installation of the DRM technology in the MP3 phones and music files is reasonable to protect the profit of Internet music service providers as well as copyright proprietors, and to prevent illegal downloading; (ii) even though consumers must perform a conversion process to access music with listening devices other than SK Telecom's MP3 phones, such inconvenience is unavoidable and does not harm profit or constitute an illegal act as long as the service providers do not have the legal responsibility to provide standardized DRM technology; and (iii) SK Telecom's acts were not intended to limit competition, but were based on the characteristics, necessity and background of DRM development (Seoul High Court Decision dated December 27, 2007; Case no: 2007Nu8623). The Supreme Court decided that the judgment of the High Court is legitimate and dismissed the appeal filed by the KFTC (Supreme Court Decision dated October 13, 2011; Case no. 2008Du1832).

Partner Hai Sung Park from the Litigation Group and partner Hae Sik Park and associates Sung Moo Jung and In Seon Choi from the Antitrust Team handled this case.

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