Korea is one of the few newly industrialized countries that have successfully institutionalized its own competition law and policy. In December 1980, the general competition law, the Monopoly Regulation and Fair Trade Act (MRFTA), was enacted. Competition policy and institutions began to emerge in a country with a strong tradition of extensive economic management by the state.

The MRFTA was modeled on competition laws in Germany and Japan and covers all of the principal competition policy problems: monopoly, monopolistic behavior, collusion and unfair practices. But the Act is more than a conventional competition law. Since amendments in 1986, the MRFTA and its instruments have become a means for directly controlling chaebol's expansion and exercise of economic power. As a result, the law has many distinctive features in terms of its goals, basic concepts, legal rules and standards, and enforcement.

Chaebol regulation under the MRFTA has been strengthened in the wake of the 1997 economic crisis. Chaebol became the target of major reforms, and the Korea Fair Trade Commission (KFTC), the administrative agency responsible for enforcing the MRFTA and related statutes, has played a central role in those reforms. This chapter examines these policy efforts by the KFTC and their effect on chaebol restructuring. The first section discusses some common perceptions of the chaebol problem that serve as the intellectual foundation of the MRFTA and some of the historical factors that motivated its legislation and subsequent amendments and enforcement.