[Letters] Stop the market distortions

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[Letters] Stop the market distortions

As you reported recently in “Corporate oligopolies increase,” the Fair Trade Commission is once again wringing its hands over the potential for market abuse in numerous local industries which are dominated by a small number of local firms. The FTC has promised to keep its eyes open for unfair competition. Among the industries mentioned by the FTC, however, were beer and automobiles, sectors in which the oligopoly is due largely to the government itself.

As of 2008, local brewers Hite and OB controlled nearly 100 percent of the Korean beer market. This lack of competition, however, should come as no surprise to the FTC. For years, smaller, upstart brewers have been prohibited by law from bottling their beer and competing with Hite and OB, while foreign brews are slapped with a 30 percent import tariff. The result has been a life free of competitive pressure for Hite and OB, but higher prices and lower quality beer for consumers.

Similarly, in the automobile market, the Korean government protects local automakers with a variety of barriers (tax, regulatory, tariff) to foreign-made cars. For example, in addition to an 8 percent import tariff, foreign cars are subject to a tax burden of more than 70 percent, compared to 56 percent for domestic cars. Surely the leaders of the FTC don’t need a high-powered think tank to tell them that such a system will result in oligopoly.

According to its Web site, the FTC aims to foster a “competitive market environment by reforming anti-competitive regulations which allow entry barriers and limit business activities.” I trust, then, that the FTC will find the government’s own market distortions in the beer and car markets to be of great interest in its efforts to enhance local competition.

Aaron McKenzie, graduate student, Seoul
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