APPC Homepage

In October 2011, the Supreme Court upheld the Seoul High Court’s ruling (2007Nu8623, June 8, 2007), which ruled that the plaintiff SK Telecommunication (“SKT”), the provider of mobile telecommunications services and online music service Melon, neither abused its market-dominant position in mobile telecommunication market to restrain competition nor undermined consumers’ benefit in the online music service market, by its closed Digital Rights Management (DRM) policy.

Although SKT asked mobile phone manufacturers to provide SKT MP3 mobile phones to play the DRM MP3 music files (Melon file) provided by Melon, it did not force customers using SKT MP3 phones to purchase the Melon files. There was no tying relationship. However, the district court erroneously accepted the Korea Fair Trade Commission (“KFTC”)’s claim that SKT forced users to purchase Melon files through de facto tying. In addition, KFTC did not prove that SKT’s actions resulted in any anticompetitive effects or adverse effects on consumers in the online music market by SKT MP3 phones. Instead, KFTC argued that the rapid growth of Melon in the online music market was due to the abuse of SKT’s dominant position in the mobile telecommunications market through SKT MP3 phones.

In other words, the lower court erroneously decided that the rapid growth of Melon was because of leveraging the dominant position of SKT by being implemented in SKT MP3 phones. However, the court correctly denied SKT’s ‘abuse’ of dominance. The Supreme Court just affirmed the main legal issues from the lower court’s decision: denying the abuse of SKT’s market-dominant position.

Therefore, the Court did not affirm not only the monopoly leveraging that the lower court acknowledged but also the de facto tying relationship in contrast to some opinions on the Melon case. To avoid misunderstanding about the meaning of the Melon case, the Court should have ruled that the lower court’s theories of de facto tying and monopoly leveraging were irrational and unacceptable under the Korean competition law.