Antitrust/Competition Consent Orders in Korea

in 2011, the Korean National Assembly passed, along with the Korea-U.S. FTA and related bills, a law that  allows the Fair Trade Commission of Korea (KFTC) to accept consent orders.  A consent order is similar, in many respects, to a nolo contendere plea. The consent order process has allowed the KFTC to punish without the admission of guilt to the company. This has lead to a decrease, in recent years, of a burden on the KFTC, more efficient enforcement proceedings, and has sped up many M & A deals – while allowing companies doing business in Korea to more adequately gauge the risk of a certain actions by the company. The disposition is similar, in a criminal matter, to a nolo contendere (no contest).  In short, the accused accepts the proposed punishment, however, doesn’t admit guilt. Thus, the company may save a little face and time, while the government is

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Abuse of Market Dominance in Korea: Competition Law in Korea

The Seoul Central District Court ruled earlier this year that Namyang Dairy Products Co. (“Namyang”) was in violation of the Monopoly Regulation and Fair Trade Act of Korea by abusing its market dominance and “unfairly taking advantage” of retailers. For more Antitrust/Competition Law articles please click on the labels noted Antitrust Law on the right. Namyang, a major Korean dairy company, was accused by retailers of, among other things, forcing retailers to purchase expired or soon to expire products and purchase unpopular products.  The Seoul Central District Court in 2014GaHab592238 ruled the company was in violation of Article 23 of the Monopoly Regulation and Fair Trade Act of Korea and awarded damages to the plaintiffs. Monopoly Regulation and Fair Trade Act of Korea Article 23(1), no. 4 prohibits a company or individual from: “Trading with a certain transacting partner by unfairly taking advantage of his/her position in trade.” The Court

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Statutory Severance Obligations in Korea after Acquisition of Company in Korea

Korean employers have, attempted, in many cases unsuccessfully, through mergers, to reduce the statutory severance obligations of a Company through a company acquiring a Company with a workforce with large outstanding severance obligations.  The acquired company, in most cases, is strapped with debt and an inefficient workforce. The acquiring company, inter alia, often alleges that as a separate legal entity it owes no duties to the employees of the acquired company. The acquiring company, thus, alleges that the employees of the old Company are not obligated to receive the accumulated years of severance, thus, reducing vested employee obligations. The Korean Supreme Court has ruled, on numerous occasions, that if an employee has continued work with the new acquiring company that the duties owed to the employees by the acquired company in Korea is owed to the employees by the acquired company, thus, often negating the benefit of the merger. Some

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English-speaking Korean lawyers and International Lawyers at International Law Firm in Korea discussing issues of Korean Law

IPG Legal is a leading client-focused international law firm with offices in Korea that is, often, selected over the ubiquitous Korean Law Firms when success is essential and success depends on nuanced street-smart advice, proactive  and unconflicted representation. Our attorneys are, intentionally. different from the crowd.  From our retired judge partners to our junior associates, we are all trained with an intense focus on client success, lawyer proactivity, and to understand the nexus between your commercial and legal needs. Our attorneys shall never push to you useless memos, non-nuanced legal advice or get you into litigation without an honest assessment of the merits and shortcomings of the matter. We are  – intentionally different from the crowd.  Globally Experienced – Locally Connected.  We are IPG.  Korean Legal Practices Korean Antitrust, Competition & FTC Arbitration, Int’l & Domestic Korean Civil Litigation Korean Criminal Defense Korean Corporate Law & Compliance Korean Employment, Labor &

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Korean Distributor Sales Territory or Customer Restrictions in Korea: Korean Distributor law Agreements in Korea

Korea’s Distribution Law is governed, primarily, by the Commercial Code of Korea, Monopoly Regulation and Fair Trade Law of Korea (FTL) and the, newly enacted, Fairness in Distributor Transactions Act of Korea.  These laws comprise a substantial body of law that is consistently evolving. The main regulatory body enforcing the FTL of Korea is the Fair Trade Commission of Korea (“FTC”).  The Fair Trade Laws of Korea, in most cases, creates the most significant risk for suppliers and manufacturers doing business with distributors in Korea.  A nuanced understand coupled with a proactive approach to your distributors is necessary in succeeding in the Korean market. Distribution Agreements in Korea General Rule In general, Korea prohibits the “unfair restriction” of trade based on the territory or type of customer. However, numerous exceptions exist to this general restriction.  I shall be detailing some of these exceptions over the next couple of months.  Please check

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Fiscal Transparency in International Business: International Business Structures

The September 2015 edition of International Bar Associations “Business Law International” has an interesting article entitled: “Fiscal Transparency – International Business Structures and Issues” The article is useful for, also, those doing business in Korea.  The articles does not, specifically, address in any detail issues in Korea, the article does a great job in explaining issues relevant to those forming partnerships/joint ventures with UK, U.S. and developed European economies. The article notes, in part,  that: “The continued globalization of business generally and the increased burdens imposed by such measures as common reporting have brought into focus the issues arising with transparent entities and how they are regarded internationally.  Most unsatisfactorily is the absence of a consistent position as to whether an entity is transparent or opaque by default.  As the Anson cases demonstrated, the complexity in this area can be considerable.  resolving this may prove difficult and it might be

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Regulating the Korean Government Way: Consumer vs. Small Retailers

The Korean government, increasingly, is looking for ways to project small enterprises, often, with disregard for consumers.  A recent regulation on book sales is a key example.   A new regulation allows booksellers to, only discount from the cover price by up to15% with 5% of the discount via a bookstore membership scheme.  The new regulation does not distinquish between recently released books and older books.  The law has led to some stores to discount books by as much as 90% and for customers to drastically increase the number of books purchased before the enactment of the law late next week.   The purpose of the law, facially, is to protect small stores from online discount vendors and mega bookstores.  Many consumers are up in arms. What do you think?  [email protected] (c) Sean Hayes – SJ IPG. All Rights reserved.  Do not duplicate any content on this blog without the

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Weekly Korean Legal News From International Law Firm – IPG Legal for the Week of July 28, 2014

Weekly Korean Legal News From International Law Firm – IPG Legal for the Week of July 28, 2014Korean Legal News Reported by the Media on the Week of July 28, 2014 IMC may blacklist Korean builders over collusion Prosecutors continue probe into ferry owner’s driver Foreign workers upset by severance pay formula Restructuring urgent for big Korean companies Relocation of USFK Headquarters to Go Ahead Most Recent Posts from the Korean Law Blog This slot is reserved for the new article Korean Franchise Law Basics for Franchisors “Samsung’s First Family Struggles to Keep Grip on Company” Report by Bloomberg Debt Collection in Korea: Foreign Creditor vs. Bankrupt Korea Debtor Opportunities in Korea’s Growing Tuning & Performance Modification Industry for Foreign Companies ___ Sean Hayes may be contacted at: [email protected] Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked

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Korea Companies Defendants in Anti-Dumping Lawsuits Second to Only China: Check the Veracity of Data Produced by Korean Companies

According to statistics from the World Bank, Korea is second to only China in the number of anti-dumping lawsuits filed against Korean companies (Chinese companies accounted for 28.7%; Korea 10.7%; U.S. 3.5%; and Japan 3%). It is advisable for clients engaged in anti-dumping cases to confirm the veracity of the data presented to the U.S. International Trade Commission (ITC).  The ITC have few resources to confirm the data.   We were retained, last year, for an anti-dumping case against a Korean conglomerate.  We have seen a drastic increase in the number of clients interested in taking on Korean and Chinese companies alleged to be dumping products into the United States.  We expect the number of cases will increase after a few successful cases by U.S. and European companies against Korean and Chinese companies.  _________Sean Hayes may be contacted at: [email protected] Sean Hayes is co-chair of the Korea Practice Team at IPG

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Korea’s Samsung One of the Top 10 Most Innovative Companies: Booz & Co.

Booz & Co. yearly ranking of the 10 most innovative companies places Apple in the top spot with Samsung closely behind.  What do you think?  What do you think about Samsung’s spending on R & D compared to Apple?  Toyota is the only company on the list that outspends Samsung on R & D and is the 6th largest company in terms of R & D spending.  Courtesy of Flick, Dennis Goedegebuure. Interesting that Amazon makes the list.  What is so innovative about Amazon?  They seem to be just the first to come to market with a comprehensive online shopping mall. __________Sean Hayes may be contacted at: [email protected] Sean Hayes is co-chair of the Korea Practice Team for an international law firm. He is the only non-Korean to have worked as an attorney for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be

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Finding a Korean Distributor: Top 10 Things to Know Before you Jump into Bed with an Agent in Korea

Too often we deal with clients looking to collect on unpaid invoices to distributors/customers in Korea and resolve IP and other disputes between these distributors/customers because of clients rushing into relationships without vetting out the anticipated distributor or having a very poorly drafted distribution agreement.  Many distributors in Korea are fantastic, while, others are nothing more than order processors -they, simply can’t or don’t want to sell.   Additionally, in these tough economic times, too many companies, in Korea, are struggling to stay afloat.  If your distributor doesn’t know the market, you will find yourself with unpaid invoices from customers and issues with your distributor.   Do yourself a favor and consider the following before engaging a local company to distribute your products. 10 Ten Things to Consider Prior to Doing Business with a Distributor in Korea Has the Korean distributor worked with other foreign companies?  If not, you are dealing

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Apple vs. Samsung: “Koreans are furious at China for copying our products. But when Korea does the same, Koreans defend the action. That is a highly distorted form of patriotism. When a company takes the wrong path, it is the public’s job to correct it.”

Long ago, trade economists noted the best guarantee a developing economy to start playing by international rules is when it starts creating its own intellectual property worth defending. Korea is in many ways, has long ago passed that point. And yet, in some ways, it has not yet reached that development milestone. As I have repeatedly pointed out, Korea has yet to develop a market-defining product. It has produced hundreds of thousands of very good to excellent products, many of which have been significant improvements on the original designs created by others. The Galaxy line of products is a good example of this. Putting aside patent issues for the moment, it is not enough to produce high quality products that are often better in various ways than the originals. Producing improved copycat models requires priorities that limit basic R & D. While some R & D is put into improving

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CEO/Chairman of Chaebols Serving Time in Jail in Korea?

Things may be changing in Korea.  The Chairman of Hanwha Group was sentenced by the Seoul Western District Court, today, to a KRW 4 billion fine and four years in jail for misappropriating/embezzling Hanwha Group funds.  Hanwha’s Chairman Seung-youn Kim, a few years back, was convicted of beating a young man with a pipe and threatening the life of other individuals.  The Korean Court System sentenced Kim to no time in jail for that offense and the president, eventually, pardoned Kim with a number of other presidents and chairmen of Korean conglomerates.   Is this a sign that things are changing in Korea?  Will the Seoul High Court uphold the judgment?  Will the President pardon Kim? As we know, many chairman and presidents of companies have been convicted of embezzling company money and have received no time in jail.  It will be interesting to see if this judgement will be

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Philips Fined by Korea Fair Trade Commission for Price Fixing

The Fair Trade Commission of Korea has fined Philips, a Dutch company, for price fixing.  The Fair Trade Commission fined Philips KRW 1.5billion (USD 1.3 million) for, inter alia, prohibiting online retailers from offering discounts and certain products to potential buyers. Philips, according to the Korea’s Fair Trade Commission is the top small appliance company in Korea with a 57% share of the electric toothbrush market, 61% share of the electric shaver market; 45% share of the iron market; and a 31% share of the coffee-maker market. The Fair Trade Commission has contented that prices have not decreased after the implementation of the Korea-EU Free Trade Agreement, because of price fixing by manufacturers.  Philips is the first EU company to be fined by the Fair Trade Commission. Other articles on this issue and the Korea Fair Trade Commission:  FTC to Investigate European Car Makers Fines by Fair Trade Commission Increases

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Korea Fair Trade Commission To Investigate European Car Makers

The Korea Times has reported that the Korea Fair Trade Commission is considering investigating BMW, Mercedes Benz, Audi, and Volkswagen for price fixing.  The Korea FTC has aggressively investigated both foreign and domestic companies for allegations of price fixing and other unfair trade practices. The Korea Times article, in part, notes that:   After monitoring the prices of BMW, Mercedes Benz, Audi and Volkswagen vehicles, the country’s most popular imported auto brands in that order, officials at the Fair Trade Commission (FTC) said Wednesday there are reasons to allege that these companies have been involved in profiteering and collusion. FTC didn’t say whether or not it will conduct a probe but on the basis of findings, it reserves the right to do so at its own discretion. The automakers have lowered the prices of their cars by an identical 1.4 percent after the Korea-EU free trade agreement (FTA) went into

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Nonghyup Sues Korea Fair Trade Commission at Seoul High Court

The National Agricultural Cooperative Federation has filed suit against the Korea Fair Trade Commission at the Seoul High Court.  Nonghyup is claiming that the monopoly prevention measures, imposed by the KFTC and Korean law, should not be applied to an organization with a main function of supporting struggling farmers.  What do you think?   The Korea Times reports, in part, that:   The National Agricultural Cooperative Federation, otherwise known as Nonghyup, said Thursday it had filed a suit against the Fair Trade Commission (FTC) with the Seoul High Court. This comes one month after the FTC prohibited Nonghyup and its affiliates from making equity investments in or offering loan guarantees to one another. Conglomerates with assets of 5 trillion won ($4.25 billion) or more, including Samsung, LG and Hyundai among others, are subject to the restriction aimed at preventing the distortion of conglomerate governance structures. As of April 12, Nonghyup had

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Korea Fair Trade Commission to Investigate Korean Chaebols

The Korea Times has report that Chairman Dong-Soo KIM of the the Fair Trade Commission of Korea will strengthen its monitoring of Korea’s main conglomerates.  We suspect that increased monitoring of major foreign-capital invested enterprises will, also, be the target of the increased monitoring.  We strongly advise to have an attorney conduct a complete compliance audit immediately. The Korea Times reported, in part, that: Kim Dong-soo, chairman of the Fair Trade Commission (FTC), said Wednesday that the FTC will disclose fact sheets demonstrating dozens of conglomerates’ stock ownership, liabilities and inter-subsidy dealings by August. Kim said 51 conglomerates banned from doing cross-investment among affiliates will be subject to the announcement which he said is to “strengthen the FTC’s monitoring to secure more transparent corporate management.” Information regarding stock ownerships of 51 firms will be announced in June, with one regarding liabilities in July and inter-subsidy dealings in August, he said.

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Korea Merger Remedies by Korea Fair Trade Commission

Earlier this year, Korea’s Fair Trade Commission has announced the amendment of its rules on merger remedies through the Notice on Merger Remedies.  The amendment revises the prior Merger Remedies Guidelines.  The most relevant changes are listed below. The KFTC will, only, utilize behavioral changes when structural changes are impracticable or may be ineffective.  Structural changes, include, prohibition of a merger, divestiture and the transfer of intellectual property rights.  The Fair Trade Commission has noted that the preferred choice will be divestiture and a merger injunction will only be ordered when the divestiture is not feasible in the situation.   The Korea Fair Trade Commission has noted that the guiding principles of the Merger Remedies is: Effectiveness, Proportionality and Transparency and Enforceability.  Arguments from attorneys should be directed at the KFTC ability to meet these guiding principles by proposed actions.  The KFTC has increased investigations and has become much more

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Fines by the Korea Fair Trade Commission Increases for Abuse of Market Position and Unfair Trade Practices in Korea

The Fair Trade Commission of Korea has implemented substantial amendments to its guidelines for imposing fines on companies doing business in Korea.  The Amendments were detailed in a document the Fair Trade Commission of Korea calls the “Amendment Notice.”  This Amendment Notice comes into effect on April 1 of 2012. The Amendment Notice will likely increase the fines imposed by the Fair Trade Commission.   Prior to the Amendment Notice violations of the Monopoly Regulation and Fair Trade Act would result in lower fines than that authorized by Korean Monopoly Law.  The change will, likely, substantially increase the fines. INCREASE IN FINES FOR UNFAIR TRADE PRACTICE AND ABUSE OF DOMINANCE IN MARKET The Amendment Notice will likely increase fines for Abuse of a Companies Dominant Market Position in Korea from 2 % to 3% of revenues earned because of the violation.  Additionally,the fine will be increased from 1% to 2% of

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FTC of Korea: All Bark and No Bite?

The Korea Times published an article, last week, on Korea’s Fair Trade Commission (FTC) that sheds light on a business and, also, consumer-friendly program offered by the FTC. The FTC has been, strongly, criticized by the main-stream for using the powers of the Commission to fight inflation in Korea in order to appease the Administration and the citizens.  Some of the most liberal, now, are even claiming that the FTC is not going far enough.  The FTC has no friends other than the Administration in near sight. No main-stream antitrust/competition law scholar, international practitioner or Korean lawyer, that I know of, believes that one of purposes of an antitrust enforcement agency is to fight inflation. I have been quoted, in depth, on this issue in articles in the Global Competition Review.   If you are interested in antitrust law, the GCR is a must have journal. Even with this fact

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