How Pass-On Theory Should Be Applied In Korean Antitrust Litigation

In this article, I analyze and support the Korean Supreme Court's acceptance of pass-on theory in the recent flour price-fixing case decided in 2012. Since Korea belongs to the civil law system that aims at making actual damage compensation by private litigation, I agree with the court that a defendant should not be required to pay more than the actual damage suffered by plaintiffs. The Supreme Court stated that a defendant should establish a causal link between the alleged overcharge and any recovery made to plaintiffs through pass-on, but concluded that the required causal link was not established in the present flour price-fixing case. However, a notable feature of the judgment was that the Supreme Court allowed a reduction of the final damages awarded anyway, not on the basis of pass-on theory, but based on the notion of fairness. I support the Korean Supreme Court's decision to allow the pass-on defense to run, with burden of proof to establish it resting on the defendant. However, I suggest that the Korean courts should not calculate a reduction of damages according to the notion of fairness when a defendant cannot establish the pass-on causal link. It is time for the Korean courts to rely on a more concrete way of calculating damages than selecting some arbitrary numbers based on the notion of fairness.