Lee Hyo-sik is Finance Desk editor at The Korea Times. He manages finance-related stories on macroeconomics, banks, stocks, bonds, crypto etc. He is passionate about covering what's happening in Korea's financial industry and explaining it to both Korean and non-Korean readers. You can reach him at leehs@koreatimes.co.kr. Your insights and feedbacks are always appreciated.
BMW dealers colluded on prices, says court
By Lee Hyo-sik
Staff reporter
The nation’s high court ruled Tuesday that a joint pricing policy by Handok Motors and six other BMW dealers here hindered market competition and constitutes price collusion.
Its ruling is in favor of the nation’s anti-trust body, which imposed a combined 14.26 billion won fine on importers of the luxury German vehicles.
The Seoul High Court said the seven importers control the distribution and sales of all BMWs in Korea. “Given this, their joint pricing policy, designed to cut the extent of discounts and keep retail prices high, removes market competition among sellers. It diminishes consumer welfare and discourages market competition, constituting price collusion.”
The court said BMW dealers argued that their mutual pricing does not harm market competition because BMW cars can be substituted by other luxury vehicles sold by other foreign and domestic carmakers.
The court stated, “Consumers consider a brand first when they buy foreign-made cars. Thus, the scope should be restricted to the market only for BMW cars. There is nothing wrong with (the Fair Trade Commission) imposing a fine on the dealers.”
From September 2004 through December 2006, Handok and other BMW importers held a series of meetings and agreed to jointly rein in price discounts in a bid to improve their bottom line.
But the commission found it illegal, saying the seven dealers control Korea’s entire BMW car market and their mutual pricing scheme hampers market competition. It levied a total of 14.26 billion won in fines.
The dealers took the case to the high court, insisting their business practice did not obstruct market competition because BMW cars are in direct competition with other foreign and domestic luxury vehicles.
Earlier, the Seoul High Court issued a different verdict concerning local importers of Lexus, a luxury unit of Toyota Motors. In May, the court ruled that the joint pricing scheme of nine Lexus dealers here was not price collusion, saying Lexus cars directly compete with non-Korean and Korean luxury vehicles.