Article 24 of the Fair Trade Law (hereinafter, “Article 24”) is a general provision. To facilitate its concrete and clear-cut application, the Fair Trade Commission issued Principles Governing the Application of Article 24 of the Fair Trade Law on 9 January 2002. The content of the Principles is summarized below:

1. Mission of the application of Article 24
   To clarify the distinction between Article 24 and related provisions of other laws and regulations such as the Civil Code and the Consumer Protection Law, the requirement of "sufficient to affect trading order" should be the first criterion applied when screening for the applicability of the Fair Trade Law or Article 24.
   On condition that the requirement of “sufficient to affect the trading order” is met, then, to ascertain the scope governed by Article 24, it is necessary to examine whether the alleged illegal practice could not be not fully corrected by, first, provisions concerning restrictive competition (e.g. monopoly, cartel, and vertical restraints on competition) and, second, provisions concerning unfair competition (e.g. commercial imitation, false advertising, business defamation). Thus, the distinction in the application of Article 24 and other articles of the Fair Trade Law is that Article 24 is applicable only as a supplementary provision.
   With respect to the issue of “protecting consumers interest,” the applicability of Article 24 will be determined by examining whether the enterprise concerned is abusing its advantageous position to use “deceptive” or “obviously unfair” sales tactics to harm consumers' interest, and the requirement of “sufficient to affect trading order” has accordingly been met.
2. Clarification of overlapping laws
   The application of Article 24 frequently gives rise to the question of overlapping with other laws, and should be resolved according to the following factors:
   (i) Contracts between enterprises or enterprises and consumers are trade terms agreed upon by both parties out of their own free will. Regardless of whether their contents are obviously unfair or whether they are subsequently performed, contractual behavior should in principle be regulated by contract law. Article 24 is applicable only in exceptional circumstances where the behavior threatens the competitive order or market trading order. If obviously unfair content of a contract fails to meet the requirement of “sufficient to affect trading order,” it should be resolved through civil remedies proceedings. Only if this requirement is met and public interests are at stake should Article 24 be invoked.
   (ii) Although protecting consumers' interest is among the legislative purposes expressly set forth in Article 1 of the Fair Trade Law, it is necessary to distinguish between the core legal interests protected by the Fair Trade Law and those protected by the Consumer Protection Law. Article 24 should be invoked only in cases where the requirement of “sufficient to affect trading order” is met and where, moreover, the conduct by nature has a bearing on the public interest. Examples would be where an enterprise's relatively advantageous market position vis-a-vis its consumers is so endemic to the industry that consumers' interest is harmed due to over-reliance or the lack of alternatives.
   (iii) Holders of intellectual property rights are entitled under relevant intellectual property laws to inform whoever might have infringed their rights to terminate the infringements. However, if prior to any confirmation and notification proceedings being undertaken, the holder makes outright oral or written representation directed at its competitor's distributors or consumers (trading counterparts or potential trading counterparts) alleging that a competitor has infringed its rights or interests, and provides no basis for the recipient to form a reasonable judgment, this constitutes an abuse of intellectual property rights to create unfair competition, and is governed by Article 24.
3. Distinctions of the applicability of Article 24 vis-a-vis other articles of the Fair Trade Law
   Application of Article 24 should be guided by the principle of “supplementariness,” meaning that Article 24 is applicable only to unlawful acts that could not be completely covered by the other articles of the Fair Trade Law.
4. Factors to be considered in determining “sufficient to affect trading order”
   “Trading order” as used in Article 24 refers to trading behavior that comports with good moral ethics of society and business competition ethics centered on efficient competition. Its concrete content is the type of trading order that is in conformity with social ethics, and upon which the spirit of free and fair competition rely.
   When determining “sufficient to affect trading order,” consideration should be given to whether it is sufficient to affect the overall trading order or a majority of future potential victims before invoking Article 24; however, an actual effect on the trading order need not already have occurred. For single, individual, non-recurring trade disputes, on the other hand, civil remedies should be pursued rather than the application of Article 24.
5. Factors to be considered in determining “deceptive”
   “Deceptive” as used in Article 24 refers to acts of engaging in trade with trading counterparts by misleading them through active deception or through passive concealment of material trading information.
   “Material trading information” as used in the preceding paragraph refers to the important trading information sufficient to affect trading decisions. Whether an act is “misleading” should be determined by whether objectively there is a reasonable likelihood (and not merely some possibility) that it would mislead the general public or deceive trading counterparts, together with the evaluation of trading counterparts' ability of judgment based on the “reasonable judgment” standard (An extremely low level of care should not be taken as the standard.) Common types of such acts include:
   (i) Impersonating or free riding on the credibility of another entity.
   (ii) Disingenuous sales tactics.
   (iii) Concealing material trading information.
6. Factors to be considered in determining “obviously unfair”
   “Obviously unfair” as used in Article 24 refers to engaging in competition or commercial transactions by obviously unfair means. Its most common and concrete types fall into three general categories:
   (i) Unfair competitive conduct contrary to business competition ethics
   (a) Exploiting the fruits of others' work
   Common types of such conduct are: free riding on the business reputation of another; imitation to a substantial degree; taking advantage of the work of another person to promote one's own goods or services.
   (b) Impeding fair competition with the purpose of harming competitors
   Common types of such conduct are improper comparative advertising and making representations to trading counterparts of a competitor alleging that the competitor's infringement of intellectual property rights.
   (ii) Engaging in trade by means contrary to social ethics
   Common types of such conduct include carrying out trading by means of coercing or harassing a trading counterpart to suppress the trading counterpart's free will regarding whether to trade.
   (iii) Abusing an advantageous market position to engage in unfair trade
   Commonly seen types of such conduct are:
   Where an enterprise provides imperfect substitutes for basic necessities or services or does business in a manner contrary to business ethics or public order and good morals during a time when market mechanisms failed and market supply and demand are not in equilibrium;
   Obviously unfair conduct resulting from non-transparency of information.
   

1. Since parallel-imported genuine goods are unauthorized genuine products rather than necessarily inferior or fake products, parallel import of genuine products does not constitute counterfeiting and does not violate Article 20.
2. The determination as to whether the parallel import of genuine goods violates Article 21 depends on whether such act by the importer is intended to mislead the consumer public as to the source of the goods.
3. When a company imports goods that the original overseas manufacturer has already authorized another domestic agent to import or domestic manufacturer to produce, the authorized importer or manufacturer may have already invested heavily in marketing to make the goods well known to consumers. In such cases, if the unauthorized importing company take actions, such as by making representations with respect to the product contents, source, importer name and address, and so forth, in order to mislead consumers into believing the goods are those imported by the authorized importer or domestic manufacturer, such actions amount to “free-riding” and are considered deceptive or obviously unfair acts under Article 24.

Relevant article of law: Fair Trade law, Article 21

Article 24 of this Law prevents the enterprise from engaging in obviously unfair acts against the trading counterpart. When an enterprise abuses its superior position, improperly restricts the trading counterpart, forces the trading counterpart to accept unfair transaction terms, such actions are contrary to the business ethics and adversely affect fair competition; the provisions of the aforementioned article is therefore applicable.

However, where an enterprise does not obstruct its trading counterpart to freely decide whether to engage in a transaction or accept the transaction terms, and where similar products or other substitutes are available on the market for selection by the trading counterpart, despite its superior market position, an enterprise is not to be considered as engaging in obviously unfair actions when standardized contracts are used.

Relevant article of law: Fair Trade Law, Article 24