GCLC –Competition Law and International Agreements – AnythingNew? EU-South Korea Free Trade Agreement (EUKOR) Peter D. Camesasca Brussels, 10 December 2010
EU-Korea FTA – Competition Provisions • Agreement between the EC and the Government of Korea on the cooperation on anti-competitive activities of 23 May 2009 • EUKOR, Chapter eleven: • Section A, Competition • Section B, Subsidies
EU-Korea FTA – Competition Provisions Section A, Competition—Framework: • the Parties recognize the importance of free and undistorted competition in their trade relations; • the Parties shall maintain in their respective territories comprehensive competition laws which effectively address restrictive agreements, concerted practices, and abuse of dominance by one or more enterprises, and which provide effective control of concentrations between enterprises; • the notion of concerted practices determined by each Party’s competition laws; • competition laws apply to state-controlled enterprises; • no discrimination by monopolies.
EU-Korea FTA – Competition Provisions Prohibited practices: • agreements between enterprises, decisions by associations of enterprises and concerted practices, which have as their object or effect the prevention, restriction or distortion of competition in the territory of either Party as a whole or in a substantial part thereof; • any abuse by one or more enterprises of a dominant position in the territory of either Party as a whole or in a substantial part thereof; or • concentrations between enterprises, which significantly impede effective competition, in particular as a result of the creation or strengthening of a dominant position in the territory of either Party as a whole or in a substantial part thereof.
EU-Korea FTA – Competition Provisions Competition laws mean: • for the European Union, Articles 101, 102 and 106 TFEU, Regulation 139/2004 on the control of concentrations between undertakings, and their implementing regulations and amendments; • for Korea, the Monopoly Regulation and Fair Trade Act and its implementing regulations and amendments; and • any amendments to the above laws after the entry into force of the FTA.
EU-Korea FTA – Competition Provisions Section B, Subsidies—Framework: • Subsidy defined by reference to ASCM, Article 1.1 • Specificity defined by reference to ASCM, Article 2 • Prohibited subsidies (red light subsidies), actionable subsidies (yellow light subsidies) • Application scope • Transparency provisions
EU-Korea FTA – Competition Provisions Prohibited subsidies (red light subsidies): • export subsidies (ASCM) • import-substitution subsidies (ASCM) • unlimited guarantees (ASCM +) • subsidies to ailing companies without a credible restructuring plan (ASCM +) ASCM + prohibitions will apply to only subsidies received after the entry into force of the FTA.
EU-Korea FTA – Competition Provisions EU state aid – EUKOR subsidy provisions: • unlimited guarantees—temporary and reversible assistance under the rescue and restructuring guidelines • support to ailing companies without a credible restructuring plan—EU compatibility analysis under the rescue and restructuring guidelines • transparency provisions—more stringent than WTO but less stringent than EU state aid
EU-Korea FTA – Competition Provisions Likely impact on the European and Korean industries: • Shipbuilding sector, examples of recently notified subsidies • Korea: support for old fishing vessel and equipment replacement, support for vessel decommissioning; • EU Member States: subsidized interest rates on loans granted to ship owners, loan guarantees to ship owners (BL), tonnage based tax schemes (BL and FR), constructions of vessels (DK), modernization of fishing vessels (DK, PL, SP, SE, ), subsidies to passenger and cargo vessels (FI), other production aid to shipyards (ITA). • Automotive sector
EU-Korea FTA – Competition Provisions EUKOR--KORUS: • Competition provisions similar • Exemption from dispute settlement provisions • Subsidies provisions (EUKOR) • Cross-border consumer protection (KORUS)
EU-Korea FTA – Competition Provisions Dispute settlement mechanism: • Competition Section exempted • Similar to WTO Dispute Settlement Understanding, but faster • Consultations (30 days/30 days) arbitration (120 days)
EU-Korea FTA – Competition Provisions Provision of legal services (1) • Korea: • EU based law firms will be able to establish representative offices; • EU qualified lawyers will be able to practice laws of the jurisdiction in which they are licensed and public international law (status of foreign legal consultants, possibility of using home titles); • not later than 2 years after the entry into force of the FTA EU based law firms will be able to form partnerships with Korean firms and recruit Korean lawyers to provide "multijurisdictional“ services.
EU-Korea FTA – Competition Provisions Provision of legal services (2) • EU: Korean lawyers will be able to provide legal services: • in respect of public international law, EU law and the law of any jurisdiction where they are qualified to practice; • subject to licensing requirements and procedures applicable in the Member States (use of home title, registration with the Bar of the host Member State etc.)
EU-Korea FTA – Competition Provisions • Anything new?