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PUBLIC NOTICE ON DESIGNATION OF CATEGORIES OF AND STANDARDS FOR UNFAIR TRADE PRACTICES CONCERNING THE OFFERING OF PREMIUM OFFERS (이 영문법령은 공정거래위원회에서 제공하였습니다.)

Notice No. 198256, ,

Amended by Notice No. 19852, jun. 29, 1985

Notice No. 199011, Nov. 2, 1990

Notice No. 199312, jun. 17, 1993

Notice No. 19951, Mar. 20, 1995

Notice No. 199724, May 27, 1997

Notice No. 199811, Dec. 12, 1998

Notice No. 20003, Apr. 25, 2000

Notice No. 200115, Nov. 9, 2001

Notice No. 20042, Mar. 27, 2004

Notice No. 200511, Jul. 1, 2005

Notice No. 200716, Dec. 31, 2007

Notice No. 200911, jun. 17, 2009

Notice No. 201265, Nov. 7, 2012

CHAPTER I GENERAL PROVISIONS

Article 1 (Purpose)

The purpose of this public notice is to prescribe the categories of and standards for unfair trade practices prohibited by falling under “unfairly inducing business from a competitor’s customers” which are prescribed in the main sentence of paragraph (1) 3 of Article 23 (Prohibition of Unfair Trade Practices) of the Monopoly Regulation and Fair Trade Act.

Article 2 (Definition of Premiums)

“premiums” in this public notice means economic interests offered by a business operator to general consumers concomitantly with the trade of his/her goods or services or with the trade of goods or services of any business operator who is in business relations with him/her.

Article 3 (Types of Premiums)

“The types of premiums” prescribed by this public notice shall be as follows:

Deleted;

2.	Premiums offered to consumers via a prize draw (referring to premiums offered by a business operator to general consumers by a prize draw concomitantly with the trade of goods or services; hereinafter the same shall apply);

Deleted.

Article 4 (Economic Interests)

(1)	"Economic interests" in Article 2 (Definition of Premiums) means any of the followings:

1.	Goods, cash, discount coupons, gift certificates, or other securities;

2.	Invitations to receive free entertainment, movie theaters, sports games, travel, etc.;

3.	Benefits or other services;

4.	Other economic interests recognized as enticements of customers.

(2)	Economic interests prescribed in paragraph (1) shall include goods which can be offered without investing particular expenses or goods deemed unobtainable without paying a usual price even if they are not put on the market.

(3)	Any of the following shall be excluded from economic interests prescribed in paragraphs (1) and (2):

1.	Reduction or markdown of a price, or the partial refund of a price received, which is recognized as a socially accepted business norm;

2.	Follow-up service recognized as a socially accepted business norm;

3.	Remuneration for labor of a counterpart of trading which is recognized as a socially accepted business norm;

4.	Provision of goods or services necessary concomitantly for the sale or use of any goods or for the provision of services, which is recognized as a socially accepted business norm;

5.	Where it is a business practice to sell at least two goods in a bundle, and thus the receipt of any one of them is not appreciated as free of charge;

6.	Where the sale prices of at least two goods are labeled respectively and it is possible for the counterpart of trading to purchase only one of them if he/she wishes to do so;

7.	Other cases recognized as socially accepted business norms in the light of the character, substance, etc., of the relevant goods or services.

Article 5 (Scope of Trade)

“Trades of goods or services” in this public notice means trades conducted in all stages of distribution until the goods or services produced reach the final consumers and include the sale, lease, exchange, receipt of deposits, grant of credit, solicitation of credit card users, etc.

Article 6 (Definition of Prize Draw)

(1)

"Prize draw" in this public notice means determination of a counterpart to whom premiums will be offered or of the values of premiums to be offered by lottery or using other possibilities or by contending for superiority of any specific act or determining the appropriateness or inappropriateness thereof.

(2)	"Lottery or using other possibilities" in paragraph (1) means any of the following:

1.	Using lottery tickets;

2.	Drawing lots using receipts, or containers or packages, etc., of goods;

3.	Inserting premiums or lottery tickets in some of the goods and making purchasers unaware of the goods in which the premiums or lottery tickets are inserted;

4.	Inserting in each good a premium or lottery ticket, the value of which is different from each other and unknown to a purchaser;

5.	Setting a specific condition concerning a natural phenomenon or any other incident to occur in the future and offering promised premiums to some or all of the counterparts to trading.

(3)	"Contending for superiority of any specific act or determining the appropriateness or inappropriateness thereof" in paragraph (1) means any of the following:

1.	Soliciting predictions of any matter which is temporarily unascertainable at the time they are solicited, and contending for superiority of the replies thereof or determining the appropriateness or inappropriateness thereof;

2.	Soliciting replies to questions related to information and knowledge concerning the business operator or goods, or to hobbies, entertainment, refinement, etc., and contending for superiority of the replies thereof or determining the appropriateness or inappropriateness thereof;

3.	Contending for superiority of a match, performance, entertainment game, etc.

(4)	"Consumer prize draw" in this public notice includes the following:

1.	Inserting subscription coupons in containers or packages, etc. of goods;

2.	Printing questions on containers or packages of goods;

3.	Asking questions in advertisements, etc., the answers to which become easy by purchasing goods;

4.	Contending of specific acts among purchasers of goods, such as a match, performance, etc.

CHAPTER II CATEGORIES OF AND STANDARDS FOR INAPPROPRIATE OFFERING OF PREMIUMS

Article 7 Deleted.

Article 8 (Inappropriate Offering of Premiums to Consumers by Prize Draw)

(1)

If the total value of premiums offered by a business operator as premiums for consumers by a prize draw exceeds three percent of the expected sales price of the goods or services accompanying premiums, or if the value of a premium that a business operator offers or proposes to offer to consumers by a prize draw exceeds 20 million won, it shall amount to an inappropriate offering of premiums: Provided, That where the total value of premiums offered by a business operator to consumers by a prize draw does not exceed 30 million won, it shall not be construed as an inappropriate offering of premiums, even if it exceeds three percent of the expected sales price of the goods or services.

(2)	Notwithstanding paragraph (1), the upper limit for a business operator who runs business of publishing periodicals, game sponsorship, or broadcasting (excluding TV home shopping business) shall be five percent of the expected sales price of the goods or services accompanying premiums.

(3)

The expected sales price referred to in paragraphs (1) and (2) shall be calculated as follows: Provided, That if the sales price is substantially changed by at least 30% compared to that in the same period of the previous year, or if there exists no sales price in the previous year, the annual turnover converted from the sales price in the relevant year up to the end of the month before the commencement date of the scheduled period for offering premiums, shall be the criterion:

1.	Business, excluding game sponsorship business and broadcasting business:

[Here are more details (including tables and formulas) related to the mentioned above. Please contact Center for Legal Translations of KLRI if you need the details.]

2.	Game sponsorship business and broadcasting business:

[Here are more details (including tables and formulas) related to the mentioned above. Please contact Center for Legal Translations of KLRI if you need the details.]

3.	Where premiums are offered only to specific consumers or only at specific shops, the calculation of the expected sales price shall be based on the expected sales price generated by such specific consumers or at such specific shops;

4.	Where premiums are offered concomitantly with the trade of any business operator in business relations with the business operator in question, the expected sales price shall be the trade amount generated between him/her and the relevant business operator.

(4)	Labeling and advertising without the following details of the relevant premium event, shall be deemed unfair practices:

1.	Period for events for offering premiums;

2.	Conditions of offering premiums, details of premiums, etc.

(5)

In cases of premiums to be offered to consumers by a prize draw at the time new goods are released following a business start-up, business opening event, or entry to new business, etc., the provisions under the main sentence of paragraph (1) shall not apply for three months from the date of business start-up, business opening, or release of new products.

(6)

In offering premiums to general consumers by a prize draw, if a business operator discriminates against consumers who have not purchased his/her goods or services in the methods of participation, or number of times of participation, etc., by comparison with the consumers who have purchased his/her goods or services, the relevant business operator's offering premiums shall be deemed offering premiums to consumers by a prize draw.

Article 9 Deleted.

Article 10 (Calculation of Values of Premiums)

(1)

Deleted.

(2)	The calculation of values of premiums shall be based on economic interests that can be obtained from the consumers’ perspective: Provided, That where it is difficult to calculate the relevant economic interests objectively, the following methods shall apply:

The price of a premium directly manufactured by a business operator offering the premium shall be the price obtained by adding 25 percent of the manufacturing cost of the premium, and the price of a premium purchased from any other business operator shall be the price obtained by adding 25 percent of the purchase price of the premium, respectively: Provided, That the par value in the case of cash or a gift certificate and the discounted amount in the case of a discount coupon, shall be the price of the premium, respectively;

2.	Where at least two premiums are offered, the aggregate value of premiums shall be the criterion;

3.	Where a business operator offering premiums has acquired the relevant premiums at no cost, the values of premiums shall be calculated pursuant to subparagraph 1 or 2 based on the person who has provided the relevant premiums to the business operator offering premiums at no cost.

(3)

Deleted.

Article 11 Deleted.

CHAPTER III SUPPLEMENTARY PROVISIONS

Article 12 (Exclusion from Application)

This public notice shall not apply to a manufacturer whose annual turnover is less than twenty billion won or any other business operator whose annual turnover is less than two billion won: Provided, That the same shall not apply to the provisions of Article 14 (Prohibition of Offering of Specific Premiums to Consumers by Prize Draw).

Article 13 Deleted.

Article 14 (Prohibition of Offering Specific Premiums to Consumers by Prize Draw)

Notwithstanding Article 8 (Inappropriate Offering of Premiums to Consumers by Prize Draw), offering premiums to consumers by a prize draw by allowing the consumers to present a specific combination of text, images, symbols, cards, etc., only if at least two goods or services are purchased or only if goods or services are purchased often at least twice, shall be prohibited.

Article 15 (Standards for Calculation of Periods, etc.)

The calculation of periods for the purposes of this public notice shall be based on the calendar year.

Article 16 (Relationship with other Acts)

Where a business operator intends to offer premiums by a prize draw, if the substance of the prize draw aims at seeking profit using any facility or method likely to induce speculation, it shall be subject to the application of the Act on Regulation of Speculative Acts, etc.

Article 17 (Premiums Offered by Agencies, etc.)

(1)

Premiums offered by an agency, etc. that sells goods or services of any other business operator, shall be deemed premiums offered by the business operator who supplies goods or services to the relevant agency, etc., where the business operator is involved in the premiums offered by the agency, etc. whether directly or indirectly.

(2)	"Where the business operator is involved in the premiums offered by the agency, etc. whether directly or indirectly" in paragraph (1) means any of the following cases:

Where he/she is involved in such a way as notifying the initiation of a premium event and the details, method, etc. thereof to the agency, etc., or consulting with the agency, etc. about the selection of a company to supply premiums to the agency, etc., the supply prices of premiums, or other relevant matters;

Where the amount of commission payable to the agency, etc. for the period for a premium event is significantly excessive compared to the period prior to the relevant event or where any commission is paid according to a newly created item of commission, or where the agency, etc. is subsidized by reduction of various expenses receivable from the agency, etc. or by markdown of the supply prices of goods or services, etc. supplied to the agency, etc.;

3.	Where exist any reasonable ground for recognizing that the business operator has been involved in the premiums offered by the agency, etc., based upon all other circumstances

(3)	"Agency" in this Article shall include any "franchisee" defined in subparagraph 3 of Article 2 of the Fair Transactions in Franchise Business Act, and the "business operator" shall include any "franchiser" defined in subparagraph 2 of Article 2 of the same Act.

Article 18 (Reexamination of Regulation)

The Fair Trade Commission shall examine the appropriateness of this public notice every three years counting from December 31, 2012.

ADDENDA <Fair Trade Commission Public Notice No. 1997-24, May 27 1997>

Article 1 (Enforcement Date)

This public notice shall enter into force on June 1, 1997.