[IB Tomato](IB&People) Gye-Jun Son, Head of Corporate Legal Group, Daeryun Law Firm

Served in multiple departments at the Fair Trade Commission... Specialized in fair trade and subcontracting
The need to improve systems and practices is highlighted amid growing market interest.

Fair trade and subcontracting are areas in which market interest continues to grow. It is mentioned here and there based on a variety of backgrounds, including economic democratization, power relations, protection of small and medium-sized enterprises, and revision of related systems. As government ministries grow, the number of investigative personnel is expanding, and the number of sanctions in the market is also increasing. Companies and law firms responding to this also appear to be busy.

Gye-Jun Son, an attorney at Daeryun Law Firm, is an expert specializing in the field. At the Fair Trade Commission, he worked in various positions, including the Subcontracting Department, Cartel Department, Litigation Department, Terms and Conditions Review Department, Customer Support Department, and Special Transactions Department. In addition, he served as a member of the Fair Trade Division of the Prime Minister's Office Regulatory Judgment Committee, a private review member of the Re-report Case Review Committee, a member of the Construction Subcontract Dispute Mediation Council, and an arbitrator at the Korea Commercial Arbitration Board. works with Attorney Son to learn about fair trade and subcontracting advisory aspects, characteristics of each field, market issues, and institutional improvements needed.

The following is a Q&A with Attorney Son.

-Please introduce your current work and history at Daeryun.

△He serves as the head of Daeryun’s corporate legal group. He worked at the Fair Trade Commission for about 10 years and worked at a law firm before joining Daeryun at the end of last year. Our work areas cover all aspects of corporate law, including fair trade, subcontracting, franchises, intellectual property rights, and corporate mergers and acquisitions (M&A).

-What kind of fair trade advice is there? What is different from other fields?

△In most cases, fair trade advice is given to an external legal expert in advance to determine whether a company violates the Fair Trade Act during the business planning stage. However, the Fair Trade Act often uses uncertain concepts such as ‘restriction of competition’ or ‘unfairness’. It is difficult to definitively determine whether the law has been violated. It has the characteristic of being largely dependent on the precedents of the Fair Trade Commission, a law enforcement authority.

-Recently, there has been a lot of talk about the Compliance System (CP) in the field of fair trade.

△Many companies have become interested as the fine reduction benefits for CP operation have been legislated. Applications for rating evaluation began last month, and the number is said to have doubled compared to previous years. There are three changes in this year's CP grade evaluation: evaluation stage, additional points, and evaluation procedure. First, the order of the evaluation stages was changed. Previous evaluations were conducted in the order of documents, on-site evaluation, and in-depth interviews, but starting this year, face-to-face evaluations (interviews) will be conducted after document evaluation. As on-site evaluations were conducted for companies that recorded (scheduled) a score of 85 or higher in the face-to-face evaluation, the evaluation process and tasks were somewhat simplified. Gasan branches were also opened or changed. First, additional points were added to the agreement implementation evaluation. This is based on the agreement implementation evaluation grade of the year immediately preceding the application for CP rating evaluation. Additional points are added: 1.5 points for best and 1 point for excellent. In the evaluation procedure, the classifications of grade invalidation, grade withholding, and grade adjustment except grade invalidation have been abolished. Grade withholding is a system that withholds a grade when it is inappropriate to assign a grade due to concerns about CP fairness and reliability, and grade adjustment is a lowering of measures if a violation of the law occurs before or after the grade is assigned. It would be good if CP becomes more active and improves in a way that increases practicality.

-What types of subcontracting advice are there?

△The ‘Act on Fair Subcontracting Transactions’ so-called subcontracting law advice can be broadly divided into those related to payment and those related to technology theft. The contractor (primary contractor) must not set the subcontract price at an unreasonably low level, and cannot reduce it without justifiable cause. Payment must be made within 60 days after delivery. Most advice on subcontracting law concerns these payments. Recently, requests for or misappropriation of technical data from suppliers (subcontractors) without justifiable reasons have become a problem. The Fair Trade Commission is severely sanctioning this, and issues such as whether it truly constitutes technical data or whether a justifiable reason is recognized are being addressed.

-What are the industries with particularly high levels of subcontracting advice? What are the characteristics of this?

△The Subcontracting Act applies to three industries: manufacturing, construction, and services. Among these, many problems appear, especially in the manufacturing industry. As the division of labor and specialization in the manufacturing industry progresses, many subcontracting issues are arising, and the Subcontracting Act regulations also comprehensively stipulate manufacturing subcontracting.

-Is there anything institutionally or customarily that needs improvement in this regard?

△There is a need to improve the direct payment system for the orderer (orderer-principal contractor-subcontractor structure). The direct payment system is a system in which the subcontractor directly requests payment of the subcontract amount to the orderer when the principal contractor becomes insolvent or delays payment of the subcontract amount. However, currently, there is a problem that if the contractor's creditor first seizes the contract payment claim, the subcontractor cannot exercise its right to claim directly. In order to overcome these limitations, it is necessary to establish a new provision in the Subcontracting Act that states that the portion corresponding to the subcontract payment cannot be seized.

-What are your impressions after working in the industry for a long time?

△In the field of fair trade, the response capabilities of companies themselves have increased compared to the past. This is interpreted as preparation for the risk of being subject to huge fines if fair trade laws are violated. The Fair Trade Commission's ability to investigate alleged violations of the law is also incomparable to the past. However, many point out that the procedural rights of companies being investigated for violating the law are still not sufficiently protected. Unlike the prosecution's investigation, it is a voluntary investigation that is premised on the consent of the person under investigation. However, in case of refusal or obstruction of the investigation, fines and imprisonment are possible, so it is effectively operated like a compulsory investigation. The legitimate scope of investigation by Fair Trade Commission investigators during on-site investigations continues to be an issue. In order to increase the acceptability of sanctions such as fines, due process must be strictly observed.

Reporter Hwang Yang-taek (hyt@etomato.com)

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[IB Tomato](IB&People) Gye-Jun Son, Head of Corporate Legal Group, Daeryun Law Firm (Shortcut)