South Korea’s high court has ruled that a joint pricing policy by BMW dealers in the country hindered market competition and constitutes price collusion.

Its ruling is in favor of the nation’s anti-trust body, which imposed a combined KRW14.26bn (US$12,045,000) fine on the importers of the German vehicles.

The Seoul High Court said the seven dealers controlled 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 dealers argued that their mutual pricing did not harm market competition because BMW cars can be substituted by other luxury vehicles sold by other foreign and domestic carmakers.

However, the court said that “consumers consider a brand first when they buy foreign-made cars. Thus, the scope should be restricted to the market only for BMW cars.”

From September 2004 through December 2006, the BMW importers held a series of meetings and agreed to jointly rein in price discounts in a bid to improve their bottom line. The court found this illegal, saying the dealers’ pricing scheme hampered market competition.

 

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