Who Bears the Burden of Proof in Fair Trade Cases? Justifiable Reasons for Resale Price Maintenance, Relevant Turnover, and Causation of Damage from Unfair Advertising

Question

Fair trade disputes are generally contested on two stages. One is the administrative litigation seeking the revocation of corrective orders and administrative fines imposed by the Fair Trade Commission, and the other is a civil action for damages brought by a person who claims to have suffered damage from a violation. On either stage, what decides the outcome is often, prior to whether there was a violation, who must prove what and to what degree.

This report addresses three questions. First, when it is said that minimum resale price maintenance is prohibited in principle but permitted where there is a justifiable reason, who proves that justifiable reason and by what is it determined. Second, when an administrative fine is imposed for unfair inducement of customers, is the relevant sales amount, which serves as the basis of calculation, limited to the sales of the trading partners specifically identified as having been provided benefits, or can it be extended to the sales of all trading partners. Third, to what extent must a person who concluded a contract in reliance on unfair labeling or advertising prove the causation between the advertising and the damage and the amount of damage.

The three questions lie on a single axis of where the burden of proof is placed and how its degree is set. At the disposition stage, the grounds for exception to the prohibition and the scope of calculation of sanctions are at issue; at the civil stage, the level of proof of causation and the method of calculating the amount of damage are at issue. Article 10 (2) of the Act on Fair Labeling and Advertising (the Act on Fair Labeling and Advertising) provides that business operators, etc. cannot be exempted from liability by asserting the absence of intent or negligence, and Article 11 of the same Act and Article 202-2 of the Civil Procedure Act enable the court to recognize a reasonable amount of damages where proof of the amount of damage is difficult, so the fact that the statutes have already adjusted part of the burden of proof also serves as a starting point.

This article organizes the materials to check and the points where interpretation diverges, within the scope stated by the Holdings, Summary of Decision, and disposition of two judgments rendered in 2010 and 2023, and does not determine the legality of any particular business operator or the merits of any particular claim for damages. The provisions of the Monopoly Regulation and Fair Trade Act (the Monopoly Regulation and Fair Trade Act) cited as Reference Provisions in the 2010 judgment bear the article numbers as of that time and differ from the structure of the current statute, so it is noted together that the provisions must be read on the basis of the statutes in force at the time of the conduct subject to disposition.

Material to check

First, the resale price maintenance provisions of the current Monopoly Regulation and Fair Trade Act may be confirmed. Article 2, subparagraph 20 defines resale price maintenance as an act whereby, when a business operator trades goods or services, it forces the counterparty business operator or a business operator at each subsequent stage of trade to set a trading price and to sell or provide at that price, or trades by imposing other restrictions requiring sales or provision at that price. Article 46 prohibits this, while subparagraph 1 of the proviso sets out cases where there is a justifiable reason, such as where the effect of increasing consumer welfare arising from increased efficiency outweighs the harm arising from restrictions on competition, and subparagraph 2 makes an exception for certain published works. Since the 2009Du9543 judgment interpreted the Reference Provisions then in force (Article 29 (1)) and clarified the allowance of an exception based on a justifiable reason, whether the same proviso existed in the provisions at the time of the conduct is a matter to be separately confirmed against the statutes then in force.

Second, the unfair trade practice provisions may be confirmed. Current Article 45 (1) prohibits as unfair trade practices acts that are likely to harm fair trade, and subparagraph 4 thereof covers acts that unfairly induce a competitor's customers to trade with oneself. Paragraph (3) of the same Article delegates the types or standards of unfair trade practices to Presidential Decree; paragraph (5) enables a business operator or business operator association to voluntarily establish Fair Competition Regulations to prevent unfair inducement of customers; and paragraph (6) enables a request to the Fair Trade Commission for a review of whether such regulations violate paragraph (1) subparagraph 4. Since the 2009Du9543 judgment also examined whether the Fair Competition Regulations of the pharmaceutical industry fell within the provision of money, goods, etc. exceptionally permitted thereby, the relevant provisions of the regulations and their effective dates are also subjects of confirmation.

Third, the administrative fine provisions may be confirmed. Current Article 50 (1) enables an administrative fine to be imposed, for violations of Article 45 (1) (excluding subparagraph 9), Article 46, or Article 48, in an amount not exceeding the amount obtained by multiplying the sales amount prescribed by Presidential Decree by 4/100, and, where there is no sales amount, etc., in an amount not exceeding 1 billion won. Article 102 (1) requires consideration, when imposing an administrative fine, of the content and degree of the violation, the period and number of occurrences, the scale of profits gained from the violation, etc., and paragraph (5) delegates the standards of imposition to Presidential Decree. Since Article 50 (1) states only 'the sales amount prescribed by Presidential Decree,' how the scope of the relevant sales amount referred to in the judgment is set in the subordinate norms must be cross-checked against the Enforcement Decree and public notice in force at the time of disposition.

Fourth, the provisions of the Act on Fair Labeling and Advertising may be confirmed. Article 1 provides that the purpose is to establish a fair trading order and protect consumers by preventing unfair labeling or advertising that deceives or misleads consumers and by promoting the provision of accurate and useful information. Article 3 (1) prohibits false or exaggerated labeling and advertising, deceptive labeling and advertising, unfairly comparative labeling and advertising, and disparaging labeling and advertising; Article 10 (1) imposes liability for damages upon business operators, etc. who violate these provisions toward victims; and paragraph (2) of the same Article provides that they cannot be exempted from such liability by asserting the absence of intent or negligence. Article 11 enables the court, where the fact that damage has occurred is recognized but proof of the amount of damage is difficult in light of the nature of the case, to recognize a reasonable amount of damages on the basis of the entire tenor of oral argument and the result of the examination of evidence.

Fifth, the general civil provisions and the damages provisions of the Monopoly Regulation and Fair Trade Act may be placed side by side. Article 750 of the Civil Act governs liability for tort (unlawful act), and Article 763 applies mutatis mutandis to tort (unlawful act) the scope of damages (Article 393) and comparative negligence (offsetting plaintiff's fault) (Article 396), among others. Article 202 of the Civil Procedure Act governs the principle of free evaluation of evidence, and Article 202-2, newly enacted on March 29, 2016, prescribes the calculation of the amount of damages in cases where proof of the amount of damage is extremely difficult in light of the nature of the case. Current Article 109 (1) of the Monopoly Regulation and Fair Trade Act provides for liability for damages arising from a violation, except where the business operator or business operator association proves the absence of intent or negligence, and Article 115 separately provides for the recognition of the amount of damage. Article 10 (2) of the Act on Fair Labeling and Advertising and the proviso to Article 109 (1) of the Monopoly Regulation and Fair Trade Act are worth comparing in that the structure of proof of the subjective requirements differs.

Sixth, factual materials. At the disposition stage, documents of the promotional plan established by the head office, the target, content, amount, period, and continuity of the provision of benefits, the scope of the identified trading partners and of all trading partners, sales data by medicine, and materials showing the trading practices at the time are needed. If the justifiable reason is contested, materials on the state of competition among brands in the relevant market, distributors' non-price service competition, diversification of consumer choice, and the securing of distribution networks by new entrants correspond to the factors of consideration set out in the judgment. At the civil stage, the originals of the advertising materials and the timing of distribution, the placement and emphasis in the advertising space, the circumstances of contract conclusion and the process of determining the price, and the scope of information the contracting party could have verified in advance can be aligned chronologically.

Possible readings

As for the justifiable reason, one line of interpretation follows the Summary of Decision as it stands and places the burden of proof on the business operator. Inasmuch as minimum resale price maintenance takes the form of restricting intra-brand competition, the reading is that the circumstances that the act promotes inter-brand competition and increases consumer welfare are best known and held in materials by the business operator that designed the distribution policy. On this reading, once the disposition authority shows the existence of resale price maintenance, producing market materials on its effects falls to the business operator.

Another line of interpretation separates the location of the burden of proof from the content of proof. The Summary of Decision only says to comprehensively consider the vitalization of inter-brand competition, the promotion of non-price service competition, the diversification of consumer choice, and the ease of market entry for new entrants, without setting the weight of each factor or how much material suffices. Accordingly, what level of market analysis the business operator must produce for the justifiable reason to be proven, and the point at which a burden arises for the disposition authority to produce rebutting materials, may be read differently depending on the market structure of the case. The fact that current subparagraph 1 of the proviso to Article 46 gives, as an example, the comparison between the effect of increasing consumer welfare arising from increased efficiency and the harm of restriction of competition may also affect how the framework of this comparison is drawn.

As for the relevant sales amount, the narrow reading and the broad reading diverge. The narrow reading holds that, inasmuch as an administrative fine is a sanction, only the sales of the trading partners reached by the specifically identified provision of benefits should be included in the basis of calculation. The broad reading holds that, if the provision of benefits was carried out as an act of implementation of a promotional plan aimed at trading partners generally established at the head office level, the plan as a whole, rather than the individually identified transactions, is the unit of the violation, and thus the sales of all trading partners are sales affected by the violation. Since the 2009Du9543 judgment adopted the broad reading on the condition of comprehensively considering the establishment of the promotional plan and its nationwide implementation, whether differing forms of conduct may be regarded as part of the acts of implementation, the risk of costs being passed on to prices, the difficulty of detection, and the trading practices at the time, the dispute moves to whether those conditions are met.

As for causation in damages under the Act on Fair Labeling and Advertising, the strict reading holds that the victim must specifically show that, but for the advertising, he or she would not have concluded the contract or would have concluded it on different conditions. The determination of the court below in 2021Da262905, which dismissed the claim on grounds including that the purchaser cannot be regarded as having purchased the land in reliance merely on the tax benefit, is close to this direction. The relaxed reading holds that there is no need to prove causation to a level comparable to natural science; it is sufficient that adequate causation (proximate cause) is recognized in a legal and normative perspective on the basis of the consumer concerned, and the circumstance that other causes, such as the consumer's fault, contributed does not alter this. The Supreme Court adopted the latter.

Even under the relaxed reading, however, circumstances on the consumer's side do not disappear. The Summary of Decision of 2021Da262905 listed the circumstance that the purchaser had not verified the tax obligation in advance with the competent authorities, among others, not as a ground negating causation but as one of the indirect facts to be comprehensively considered when fixing the amount of damage. Whether this is of the same nature as comparative negligence (offsetting plaintiff's fault) applied mutatis mutandis by Article 763 of the Civil Act, or is rather one element in the determination of the amount of damage under Article 11 of the Act on Fair Labeling and Advertising and Article 202-2 of the Civil Procedure Act, is difficult to determine from the Summary of Decision alone, and depending on which view is taken, the manner of reduction and the circumstances to be recorded in the reasons for judgment may differ.

The two judgments resemble each other in that they read the conduct as a whole rather than in individual fragments. 2009Du9543 took the promotional plan as a whole as the unit for determining the relevant sales amount, and 2021Da262905 took the overall and ultimate impression received by an ordinary consumer of average attentiveness as the standard for assessing the advertising. Which reading is adopted is a matter for the reader to determine after matching the promotional plan and the advertising materials, and the market materials and the circumstances of contract, and this article does not assert the illegality of any particular business operator or the merits of any particular claim.

What the decisions held

Supreme Court Decision 2009Du9543 decided November 25, 2010 stated that, even where minimum resale price maintenance appears to restrict competition within the relevant brand, 'where, according to the specific circumstances of the market, there is a justifiable reason, such as the act promoting inter-brand competition in the relevant product market and thereby resulting in increased consumer welfare, it is necessary to exceptionally permit it.' In that determination, it is necessary to comprehensively consider whether inter-brand competition is vitalized in the relevant market, whether distributors' non-price service competition is promoted, whether consumers' choice of goods is diversified, whether new entrants can smoothly secure distribution networks and enter easily, and so forth, and 'it should be recognized that the burden of proof thereon lies with the business operator in light of the purport of the relevant provisions.'

The same judgment held that acts whereby a pharmaceutical company, in order to promote the sale of medicines, provided benefits to hospitals, clinics, pharmacies, etc., such as support in goods, cash, gift certificates, etc., entertainment including golf, support for surcharges, support for event expenses including seminars, manpower support, and post-marketing surveillance, did not fall within the provision of money, goods, etc. exceptionally permitted by the Fair Competition Regulations, and exceeded the scope of normal trade practices or legitimate business activities in light of social conventions, thus constituting unfair inducement of customers. As for the relevant sales amount for administrative fines, it stated that 'where the specifically identified acts of providing benefits may be regarded as having been carried out as acts of implementation of a promotional plan aimed at trading partners generally established at the head office level, it is reasonable to regard the total sales amount of all trading partners of the pharmaceutical company for the medicine in question, that is, the sales amount of the relevant product affected by the violation, as the relevant sales amount.' The disposition reversed the portion of the judgment of the court below in which the defendant lost and remanded the case to Seoul High Court, and dismissed the plaintiff's appeal.

Supreme Court Decision 2021Da262905 decided April 27, 2023 stated that whether an advertisement has the potential to deceive or mislead consumers 'should be objectively determined on the basis of the overall and ultimate impression received by an ordinary consumer of average attentiveness,' and that in recognizing liability for damages under Article 10 (1) of the Act on Fair Labeling and Advertising, 'the causation between the unfair labeling or advertising and the damage need not necessarily be clearly proven to a level comparable to natural science; where adequate causation (proximate cause) is recognized in a legal and normative perspective on the basis of the consumer concerned, that proof should be recognized to exist,' and that, insofar as so proven, 'the circumstance that other causes, such as the fault of the consumer who relied thereon, contributed to the occurrence of damage does not alter this.'

In a case where a relocated enterprise that purchased factory site land within an enterprise city came to pay taxes contrary to the entries on acquisition tax and property tax reductions in the sales brochure, the same judgment held that it was reasonable to infer that the purchaser relied on the sales brochure, mistakenly believed that it received the reductions, and purchased the land, citing that the content of the reductions was entered intensively on the de facto first page other than the cover, that there was a high likelihood that the advertisement, in which a local government was indicated as a co-implementer, was relied upon as it was, and that the acquisition tax, etc. paid is difficult to assess as a small amount compared to the purchase price. Since it was a case where specific proof of the amount of damage was extremely difficult, the amount of damage could be determined by comprehensively considering all indirect facts such as the circumstances of contract conclusion, the degree of falsity and exaggeration, the effect on the conclusion of the contract and the determination of the price, and the circumstance that the purchaser had not verified in advance with the competent authorities, etc., and the court held that the judgment of the court below, which dismissed the claim notwithstanding, involved a misapprehension of legal principles. The disposition reversed the portion concerning the claim for damages related to acquisition tax, etc. and remanded the case to Seoul High Court, and dismissed the remainder of the appeal.

Practical checklist

This item is not advice but a bundle of questions that may be asked when cross-checking the record. First, materials on the justifiable reason may be asked about. One may confirm how the business operator delimited the scope of the relevant market, whether there are data on market shares and price trends showing the vitalization of inter-brand competition, and whether there are materials comparing, before and after the conduct, what effect resale price maintenance had on distributors' service competition or new entry.

Second, the connection between the promotional plan and its implementation may be asked about. One may cross-check when the head-office-level promotional plan document was created and whose approval it bore, whether plans were established by medicine, whether the target, content, amount, and period of the identified acts of providing benefits correspond to that plan, and whether there are materials from which the nationwide implementation of the plan can be recognized. This connection is the point that determines the scope of the relevant sales amount.

Third, the overall impression of the advertising may be asked about. One may confirm from the originals of the advertising materials in what position and with what weight the entries at issue were placed in the advertising materials, whether conditions or exceptions were written together, who was indicated as the advertising entity, and how an ordinary consumer of average attentiveness would have received those entries.

Fourth, the indirect facts of the amount of damage may be asked about. The circumstances of contract conclusion and the situation at the time, the degree of falsity and exaggeration, the effect of the advertising content on whether the contract was concluded and on the determination of the price, and the information the contracting party could have verified in advance and whether it actually did so, can be matched with materials. This is only a list of materials to check, and the conclusion is drawn by the reader.

Glossary

Resale price maintenance is an act as defined in Article 2, subparagraph 20 of the current Monopoly Regulation and Fair Trade Act, referring to an act whereby an undertaking forces a counterparty undertaking or an undertaking at the next stage of distribution to set transaction prices and sell at those prices, or engages in transactions with binding conditions attached. Minimum resale price maintenance is used to refer to the form that prohibits selling below the set price.

Intrabrand competition and interbrand competition are terms that distinguish competition among distributors selling goods of the same brand from competition between goods of different brands. 2009Du9543 placed at the center of justifiable reason such circumstances as that, even if intrabrand competition is restricted, interbrand competition is promoted and consumer welfare is increased.

Relevant sales amount is a term used by the judgment as the basis for the calculation of a surcharge, referring to the sales amount of relevant goods affected by the violation. Article 50 (1) of the current Monopoly Regulation and Fair Trade Act merely states the basis of calculation as the sales amount prescribed by Presidential Decree, so the specific scope is confirmed through subordinate norms and the judgment.

Legal and normative adequate causation (proximate cause) is the standard of proof used in 2021Da262905 in damages under the Act on Fair Labeling and Advertising; it is not a rigorous proof of causation in the natural sciences, but asks whether, taking the consumer concerned as the criterion, there exists between the advertisement and the damage a relationship sufficient to attribute liability. The same judgment stated that adequate causation (proximate cause) in general should be considered comprehensively, taking into account the probability of occurrence of the result, the manner of the unlawful act, the nature of the infringed interest, and the like.

Sources and limitations

The source of the statutory provisions is the current original text of the National Law Information Center. Articles 2, 45, 46, 50, 102, 109, and 115 of the Monopoly Regulation and Fair Trade Act are based on [Enforced October 2, 2026] Act No. 22043; Articles 1, 3, 10, and 11 of the Act on Fair Labeling and Advertising on [Enforced January 21, 2025] Act No. 20712; Articles 393, 396, 750, and 763 of the Civil Act on [Enforced March 17, 2026] Act No. 21454; and Articles 202 and 202-2 of the Civil Procedure Act on [Enforced October 2, 2026] Act No. 21993, and the date of comparison is October 16, 2026.

The source of the judgments is the Holdings, Summary of Decision, and the text of the order of the two judgments posted on the National Law Information Center. The Summary of Decision cited were translated exactly as the original wording, and company names, drug names, the amount of benefits provided, the amount of the surcharge, and the land sale price and tax amount were not stated beyond the scope presented in the Summary of Decision.

The acts subject to the disposition and the original text of the Monopoly Regulation and Fair Trade Act and the Act on Fair Labeling and Advertising as of the time of the advertisement, the Enforcement Decree of the Monopoly Regulation and Fair Trade Act and the notice on imposition of a surcharge, the wording of the Fair Competition Code of the pharmaceutical industry, the full text of the reasons for the judgment, and the lower court judgments were not compared in this article. The correspondence between the provisions at the time referenced by 2009Du9543 (Article 2, subparagraph 6; Article 29 (1); Article 23 (1) 3; and Article 24-2) and the current provisions is also a matter to be separately confirmed under the statutes and regulations of that time.

Points left open

The level of materials required for the proof of justifiable reason remains an open question. Where an undertaking submits economic analysis materials, to what extent the disposition authority must submit counter-analysis, and by what indicators the court will regard the activation of interbrand competition, were not determined by the Summary of Decision.

The scope of acts that may be regarded as acts of implementing a promotional plan may also be read differently in each case. Whether the sales of all trading partners may be regarded as relevant sales amount, even where the plan is not left in documents but is confirmed only as a practice at the sales site, or where there is substantial regional variation between the plan and its implementation, depends on how the factors considered in 2009Du9543 are applied.

If a consumer's lack of diligence in verification is taken as an indirect fact in the calculation of the amount of damage in damages under the Act on Fair Labeling and Advertising, what relationship that bears to comparative negligence (offsetting plaintiff's fault), and whether the same relaxation of proof applies to damages under Articles 109 and 115 of the Monopoly Regulation and Fair Trade Act, are issues to be confirmed in turn. The fact that the provisions on the subjective requirements of the two Acts differ may affect the interpretation.

Where a disposition of the Fair Trade Commission and civil damages concern the same act, what weight the unlawfulness recognized at the disposition stage or the relevant sales amount bears on the determination of causation and the amount of damage at the civil stage is also a remaining question. Because the two judgments dealt with different acts, this connection cannot be answered from the Summary of Decision alone.

When to reconsider

If the provisions of the Monopoly Regulation and Fair Trade Act on resale price maintenance, unfair trade practices, and surcharges, or the damages provisions of the Act on Fair Labeling and Advertising are amended, or if a new determination of the Supreme Court is rendered concerning the proof of justifiable reason, the scope of relevant sales amount, or the causation between unfair labeling or advertising and damage, this report will be rewritten.

At that time, based on the statutes and regulations as of the time of the act, the structure of proof at the disposition stage and the civil stage will be reorganized within the scope stated by the Holdings and Summary of Decision of the two judgments and the new judgment.

Statutes referred to

• 독점규제 및 공정거래에 관한 법률 제2조, 제45조, 제46조, 제50조, 제102조, 제109조, 제115조
• 표시·광고의 공정화에 관한 법률 제1조, 제3조, 제10조, 제11조
• 민법 제393조, 제396조, 제750조, 제763조
• 민사소송법 제202조, 제202조의2

Decisions referred to

• 대법원 2010. 11. 25. 선고 2009두9543 판결 · Decision ledger
• 대법원 2023. 4. 27. 선고 2021다262905 판결 · Decision ledger

Verification status

The cited provisions (Article 2, Article 45, Article 46, Article 50, Article 102, Article 109, and Article 115 of the Monopoly Regulation and Fair Trade Act; Article 1, Article 3, Article 10, and Article 11 of the Act on Fair Labeling and Advertising; Article 393, Article 396, Article 750, and Article 763 of the Civil Act; and Article 202 and Article 202-2 of the Civil Procedure Act) were compared against the current original texts on the Korea Law Information Center as of October 16, 2026. The cited judgments (Supreme Court Decision 2009Du9543 decided November 25, 2010, and Supreme Court Decision 2021Da262905 decided April 27, 2023) were compared with the Holdings, Summary of Decision, and the main text of the judgment originals on the Korea Law Information Center. The conduct subject to the disposition, the original texts of the statutes and regulations as they stood at the time of the advertising, the Enforcement Decree and notifications, and the full text of the reasoning of the judgments were not compared.