CONTENTS
- 1. Fair Trade Civil Litigation | Concept
- - Points Companies Should Bear in Mind
- - Amount Claimed in Fair Trade Civil Litigation
- 2. Fair Trade Civil Litigation | Principal Types of Applicable Cases
- - Litigation for Harm from Collusion
- - Litigation for Damages Arising from Abuse of Market-Dominant Position
- - Litigation for Harm from Unfair Trade Practices
- - Litigation for Non-Payment or Unfair Reduction of Subcontract Payments
- - Litigation over Contractual Disadvantage to a Franchisee
- 3. Fair Trade Civil Litigation | Procedure
- - Elements of Proof in Fair Trade Civil Litigation
- 4. Fair Trade Civil Litigation | Practical Response Strategies for Companies
- - Fair Trade Civil Litigation Response Checklist
1. Fair Trade Civil Litigation | Concept
Fair trade civil litigation is a legal procedure pursued where a company has caused harm through a violation of the Monopoly Regulation and Fair Trade Act and civil liability toward consumers has arisen.
A counterparty company or consumer who has suffered harm from a violation of the Monopoly Regulation and Fair Trade Act may bring a claim for damages against the offending company, or pursue a claim for the return of money, such as a claim for the return of unjust enrichment.
In such fair trade civil litigation, the injured party must prove, through objective materials, that it suffered harm as a result of the offending company's violation of the Monopoly Regulation and Fair Trade Act, so the process of securing the records needed to conduct the case can be difficult.
For this reason, the law provides that the court may, where necessary, request from the Fair Trade Commission the materials and records needed to conduct the case.
In conducting fair trade civil litigation, one may request and make use of the Fair Trade Commission's investigation records, interrogation protocols, stenographic records concerning the offending company, and other materials that may be used as evidence at trial.
Through this, the law seeks to ease the injured party's burden of proof and facilitate the smooth conduct of litigation against companies.
In addition, we represent companies that must respond to fair trade civil litigation and develop strategies for defending such suits.
For the specific legal review and use of such materials, it is advisable to obtain the assistance of a specialist attorney with thorough knowledge of the Monopoly Regulation and Fair Trade Act.
Points Companies Should Bear in Mind
A violation of the Monopoly Regulation and Fair Trade Act does not simply end with sanctions by the Fair Trade Commission; the likelihood that it will lead to fair trade civil litigation has increased.
In particular, over the past several years consumer organizations, small and medium-sized business cooperatives, and competing companies have been actively filing civil suits, and the number of cases in which such suits succeed has been on the rise.
It is essential to examine whether internal transaction structures or contractual practices amount to unlawful conduct or to an excessive abuse of a superior bargaining position.
Amount Claimed in Fair Trade Civil Litigation
Because fair trade civil litigation has the character of a claim for the return of money, the calculation of the amount of compensation becomes an important issue.
The amount claimed in fair trade civil litigation must be determined by comprehensively assessing all relevant circumstances, including the scale of the harm and whether it was intentional, what harm arose and how as a result of the violation of the Monopoly Regulation and Fair Trade Act, the extent of the economic benefit obtained by the offending company, the duration and persistence of the violation, the company's current financial condition, and the degree of its efforts to remedy the harm.
In this process, 🔗the Monopoly Regulation and Fair Trade Act you should seek the advice of a specialist attorney who can assist with the legal review of the violation.
2. Fair Trade Civil Litigation | Principal Types of Applicable Cases
We will explain the principal types of cases to which fair trade civil litigation applies.
Litigation for Harm from Collusion
This is a case in which a particular company or consumer suffers economic harm as a result of conduct that undermines fair competition, such as price-fixing or bid-rigging among companies, and the injured party brings a civil claim for damages against the offending companies.
Example: Where a small or mid-sized construction company is repeatedly eliminated and deprived of competitive opportunities in bids for projects ordered by a state agency due to advance price-fixing among large construction companies, that small or mid-sized construction company may file a claim for damages against the colluding companies.
Litigation for Damages Arising from Abuse of Market-Dominant Position
Where a market-dominant business engages in conduct such as setting prices unfairly or artificially restricting the exposure of a service in order to exclude or impede the business of a competitor, the injured company may prove this and file a civil suit seeking damages.
Example: Where Portal A excludes a competing video platform's content from its search algorithm or lowers its exposure ranking so as to restrict user access, the competing platform may bring a claim for damages against A for unfair abuse of market dominance.
Litigation for Harm from Unfair Trade Practices
Where a particular company imposes terms unfavorable only to certain counterparties or causes harm through tying or forced returns, the injured company may prove its harm civilly and proceed to litigation.
Example: Where supplier B has its transaction unit price unilaterally reduced by manufacturer A and is compelled, without a separate contract, to engage in bundled sales (tying) of A's products, B may file a civil suit claiming damages against A.
Litigation for Non-Payment or Unfair Reduction of Subcontract Payments
Where, in connection with a violation of the Fair Transactions in Subcontracting Act, a prime contractor fails to pay a subcontractor on time or unilaterally reduces the amount, the subcontractor concerned may file a civil suit on that basis.
Example: Where manufacturer A, after subcontractor B delivers its products, reduces the supply unit price by 15% without a separate contract or delays payment, B may bring a civil suit claiming payment.
Litigation over Contractual Disadvantage to a Franchisee
Where a franchisor causes harm by compelling a franchisee to accept unfair business terms, omitting items from the disclosure document, or unilaterally terminating the contract, the franchisee may bring a claim for damages against the franchisor.
Example: Where a franchise headquarters compels the sale of a new product while imposing a condition that it will not even accept orders below a certain quantity, and the franchisee incurs losses due to expiration-date issues, that franchisee may prove its harm and bring a civil claim for compensation.
3. Fair Trade Civil Litigation | Procedure
In fair trade civil litigation, the most important thing throughout the proceedings is to submit objective evidence supporting one's position.
To collect evidence, it is necessary to use the document production order system and to be well acquainted with and make use of the legal procedures that allow materials to be served from the Fair Trade Commission.
The procedure for fair trade civil litigation is as follows.
When an unfair trade practice (e.g., refusal to deal, discrimination, tying, etc.) occurs in the course of competition among companies, the injured company becomes aware of the violation.
Typically, at this point the problem surfaces through internal reports, severance of business relationships, or price distortion.
2. Securing Evidence of Harm
Unlike measures by the Fair Trade Commission, fair trade civil litigation requires the injured party to prove all facts directly, so the key is to secure materials that can prove the violation and the resulting harm, such as contracts, emails, transaction records, messenger conversations, and meeting recordings.
This stage can determine the success or failure of the subsequent litigation.
3. Calculation of the Amount of Damages
The actual harm caused by the proven violation must be calculated.
The amount of damages may include not only a direct decline in sales but also opportunity cost losses and a fall in market share, and it is quantified through accounting materials, outside appraisals, market research results, and the like.
4. Review of Whether to Use Fair Trade Commission Materials
Where the Fair Trade Commission has already investigated or sanctioned the matter, the Commission's findings, investigation materials, and written decisions can serve as powerful evidence in civil litigation.
Fair Trade Commission materials can be obtained through a “request to inspect administrative materials” or a request for disclosure of information, and may operate as favorable evidence.
5. Filing the Suit: Filing Civil Litigation with the Court of Jurisdiction
Jurisdiction generally lies with the district court for the place of residence of the injured party or of the defendant, and the suit is filed as a claim for damages.
Fair trade civil litigation may be filed within 3 years from becoming aware of the conduct, or within 10 years from the occurrence of the conduct.
6. Argument and Submission of Evidence
After the complaint is filed, argument proceeds, with the defendant's rebuttal, submission of supporting materials, and presentation of counter-evidence.
In litigation over violations of the Monopoly Regulation and Fair Trade Act, the burden of proof rests with the injured party, so the credibility and logical coherence of the evidence are important, and a specialist attorney's response strategy is required.
7. Judgment or Settlement
The court comprehensively assesses the existence of the violation, causation, and whether and to what amount harm occurred, and renders a judgment on damages; in some cases the two parties may reach mediation or settlement.
In practice, where a settlement is reached, the matter is sometimes concluded by a confidential settlement.
To prevail in fair trade civil litigation, one must prove the occurrence of the violation, its illegality, the occurrence of harm, and causation, all of which require a very high level of evidentiary support.
Elements of Proof in Fair Trade Civil Litigation
As with an ordinary claim for damages, fair trade civil litigation requires proof of the following three elements.
It must be proven that conduct prohibited under the Monopoly Regulation and Fair Trade Act (e.g., improper concerted conduct, abuse of a market-dominant position, unfair trade practices, etc.) occurred.
The fact of a sanction by the Fair Trade Commission may operate favorably for proof, but a conclusion by the Commission is not necessarily a prerequisite for filing civil litigation.
2. Occurrence of Harm
It must be specifically proven that monetary harm or competitive disadvantage occurred as a result of the unlawful act.
This must be explained in quantitative terms, such as decline in sales, additional costs incurred, or loss of opportunity, and supporting bases such as accounting materials or transaction records are required.
3. Causation
It must be shown that there is a substantial causal relationship between the unlawful act and the harm.
A mere temporal sequence is insufficient; it must be recognized that the unlawful act had a decisive influence on the harm.
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4. Fair Trade Civil Litigation | Practical Response Strategies for Companies
1. Internal Fair Trade Risk Diagnosis and Training
Through regular training for officers and employees, we ensure they understand the concept and examples of violations of the Monopoly Regulation and Fair Trade Act.
We diagnose in advance whether there is any risk of illegality in contract review, the setting of transaction terms, distribution practices, and the like.
2. Securing Legitimacy When Concluding and Amending Contracts
When changing transaction terms, clearly obtain the counterparty's consent and record the reasons, and retain supporting evidence such as emails.
Using standard contracts or forms recommended by the Fair Trade Commission is also advantageous for defense.
3. Strengthening Document and Evidence Management
Systematically retain transaction records, meeting minutes, internal approval documents, and the like so that they can be used as a basis for defense in litigation.
Oral agreements or tacit practices are difficult to have recognized in a legal dispute.
4. Explanation and Cooperation Before Fair Trade Commission Sanctions
Once a Fair Trade Commission investigation begins, voluntary correction or cooperation can reduce not only the penalty surcharge but also the risk of civil litigation.
It is important to organize the matter through measures such as submitting a prior written explanation and consulting outside experts.
5. Engaging Attorneys and Accounting Experts When Litigation Arises
Expert analysis of illegality and the amount of damages is required.
A strategy must be established for each stage—before, during, and after litigation—and securing materials to rebut the amount of damages is especially key.
Fair Trade Civil Litigation Response Checklist
Checklist Item | Confirmed | Explanation |
|---|---|---|
1. Confirm whether a violation occurred | ☐ | Ascertain whether unfair trade practices such as refusal to deal, discrimination, or tying occurred |
2. Secure evidence | ☐ | Collect materials proving the violation and harm, such as contracts, emails, recordings, and transaction records |
3. Feasibility of calculating the amount of damages | ☐ | Review whether actual harm or loss of opportunity can be quantified |
4. Confirm whether the Fair Trade Commission has made a determination | ☐ | Check whether the matter has been determined by the Fair Trade Commission or whether related materials exist |
5. Consult a legal expert | ☐ | Establish a strategy and review the prospects of litigation with a fair trade specialist attorney |
6. Design a proof strategy | ☐ | Establish a plan of proof that can systematically explain the violation, causation, and harm |
7. Research relevant statutes and precedents | ☐ | Conduct research on the Monopoly Regulation and Fair Trade Act and similar precedents |
8. Establish a strategy for filing the suit | ☐ | Prepare practical procedures such as the court of jurisdiction, the amount claimed, and drafting the complaint |
9. Review the possibility of out-of-court mediation or settlement | ☐ | Review the possibility and terms of dispute mediation or settlement outside of litigation |
10. Establish internal controls to prevent recurrence of similar conduct | ☐ | Put in place measures to prevent recurrence through institutional and contractual safeguards |
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