7.38 Billion KRW Fine for Abuse of Power Against Dassault Syst?mes Korea Dealers

Crackdown on Distribution Competition Restrictions Among Dealers in the Domestic CAD Software Market

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Dassault Syst?mes Korea was fined for abusing its market dominance by restricting the trading partners of its distributors during the domestic distribution of the CAD software SolidWorks.

On the 16th, the Korea Fair Trade Commission (KFTC) announced that Dassault Syst?mes Korea violated Article 23, Paragraph 1, Item 5 of the Fair Trade Act through conditional transaction practices and imposed corrective orders along with a fine of 738 million KRW.

Dassault Syst?mes Korea holds about a 40% market share in the mid-tier 3D CAD software market for the domestic machinery sector.

According to the KFTC, from October 2016 to December 2020, Dassault Syst?mes Korea implemented a policy (hereinafter referred to as the Sales Rights Protection Policy) granting exclusive sales rights to distributors for specific customers to prevent competition among distributors.

In the process of selling new SolidWorks licenses, if a distributor had already initiated sales activities targeting a specific customer, other distributors’ sales activities toward that customer were restricted to protect the existing distributor’s sales rights.

Additionally, during the sales of maintenance licenses, sales activities by distributors other than the existing one were restricted for customers currently under maintenance contracts or within three months after contract expiration, effectively blocking competition among distributors.

Notably, CAD software purchasing decisions are influenced by partner company requirements and developer preferences (familiarity), which impose constraints on initial selection. Once a specific product is used, the lock-in effect and switching costs are significant, making it difficult to change to another brand’s product.

Due to these product characteristics, distributors with exclusive sales rights lost incentives to improve prices and service quality for preempted customers and even used these customers as opportunities to secure distributor margins.

Ultimately, the Sales Rights Protection Policy in this case directly and significantly restricted competition within the brand (among distributors). Meanwhile, due to the high entry barriers and oligopolistic market structure making inter-brand product switching difficult, pro-competitive effects were deemed unclear or minimal.

The KFTC stated, "This action is a strict sanction against a dominant player in the CAD software market, where inter-brand competition is structurally limited, for blocking distribution competition among distributors." It added, "Especially considering that the main customer base for SolidWorks products consists of small and medium-sized enterprises, this measure is significant in stopping their potential harm."

This content was produced with the assistance of AI translation services.