10. How are tie-in arrangements in businesses determined to be in violation of Article 20(v) of the Fair Trade Act?
- In determining what constitutes "tie-in sale", the following factors may be taken into consideration:
- There is a presence of at least two distinguishable products (or services):
When analyzing any contract for tie-in sale, the first step is to determine the presence of two distinguishable products (or services). The following factors can be considered to determine whether the two products (or services) are distinguishable:
a. The normal trade practices within relevant sectors;
b. Whether there is remaining value in the products (or services) if the two are separated;
c. Whether there is a cost saving if the two products (or services) are packaged and sold together;
d. Whether the seller designates different prices for the two products (or services);
e. Whether the seller had previously sold the two products (or services) separately;
f. There should be explicit or implied requirement agreement that the buyer can not freely choose whether to purchase the product and the tie-in product simultaneously from the seller.
- There should be explicit or implied requirement agreement that the buyer cannot freely choose whether to purchase the product and the tie-in product simultaneously from the seller.
- To determine whether a tie-in sale is in violation of this Act, the following factors should be considered:
- The seller should have a certain degree of market power in the tie-in products: In the determination of a tie-in sale, whether the seller has a certain market power in the market of the tie-in products is a major factor for consideration. If the seller does not possess sufficient market power, it will be difficult for him to promote the tie-in sale program. Should the seller be able to do so without possessing sufficient market power, his adverse influence on the market competition will also be minimal.
- Whether there is concern of obstructing the market of the tie-in products: When there is concern that the act of tie-in sale will obstruct fair competition in the market, such as where the market of product tie-in for sale will suffer a certain degree, volume, or ratio of exclusion effect, such act will be considered unlawful.
- Whether there is due cause: Acts to ensure the business reputation and product quality of the seller, or to protect the intellectual property rights of the product creator, may be considered as having due cause, and will be permitted
Relevant article(s) of law: Fair Trade Act, Article 20; Enforcement Rules of Fair Trade Act, Article 28
Updated at：2016-02-22 14:58:15