CONTENTS
- 1. Fair Trade Administrative Litigation | Concept
- - Examples of Fair Trade Administrative Litigation
- 2. Fair Trade Administrative Litigation | Procedure
- - Principal Grounds on Which Fair Trade Administrative Litigation Is Brought
- 3. Fair Trade Administrative Litigation | Risks a Company May Face
- - Corporate Response Strategies for Fair Trade Administrative Litigation
- - Daeryun's Assistance
1. Fair Trade Administrative Litigation | Concept
Fair trade administrative litigation refers to litigation brought where a party objects to a corrective measure, the imposition of a penalty surcharge, or the like by the Korea Fair Trade Commission.
Because fair trade administrative litigation must be brought against the Korea Fair Trade Commission, a deep understanding of and expertise in the Monopoly Regulation and Fair Trade Act are required.
An overall understanding of the Administrative Litigation Act and familiarity with its procedures are also necessary.
The Korea Fair Trade Commission announced that the scale of penalty surcharges imposed on companies in 2024 increased by more than 26% compared with the previous year.
Accordingly, many companies are bringing administrative litigation, but the rate of favorable outcomes is low, and because administrative litigation brought against the Korea Fair Trade Commission adopts a two-tier system that omits the first instance, a sense of insufficient judicial remedy for one's rights may be felt.
Unlike other administrative litigation, which proceeds under a three-tier system, fair trade administrative litigation proceeds under a two-tier system that goes through the Seoul High Court and then to the Supreme Court, without a district court.
Therefore, to obtain a favorable result, it must be conducted carefully with the legal counsel of an attorney experienced in fair trade administrative litigation.
Unlike other contentious procedures, because the High Court conducts a review of the facts, there are many materials to be prepared and reviewed in a short period, and the grounds for the Korea Fair Trade Commission's imposition of the disposition must be examined thoroughly.
If you are considering fair trade administrative litigation, please consult about your specific matter with a specialist attorney who has expertise relating to the Monopoly Regulation and Fair Trade Act.
Examples of Fair Trade Administrative Litigation
Fair trade administrative litigation is a procedure in which a company objects, before a court, to various administrative dispositions imposed by the Korea Fair Trade Commission on companies or individuals—that is, administrative sanctions such as corrective orders, the imposition of penalty surcharges, requests for accusation, and publication orders.
It is brought as a revocation lawsuit or a lawsuit confirming nullity, and is a legal means to rectify the Korea Fair Trade Commission's administrative action where it is judged to be unlawful or unjust.
The measures imposed by the Korea Fair Trade Commission for violations of the Monopoly Regulation and Fair Trade Act can bring about, in addition to a financial blow to the company (penalty surcharges, the cost of complying with corrective measures), real business risks such as a decline in brand credibility, severance of business relationships, and worsening public opinion following media coverage.
Accordingly, fair trade administrative litigation is used as a key strategic response means directly linked to a company's survival and management stability, going beyond a mere procedure for objecting to a sanction.
▶Principal Examples of Litigation
Claim for revocation of a corrective order: where a distributor contests the legality of a corrective measure order received on the ground that it imposed contract terms on a supplier
Claim for revocation of a request for accusation: where a company that has been criminally accused for a violation contests the appropriateness of that accusation
2. Fair Trade Administrative Litigation | Procedure
Fair trade administrative litigation is conducted in order to object to a corrective measure order or the imposition of a penalty surcharge by the Korea Fair Trade Commission.
Before bringing administrative litigation, one may also file an objection, which is the Korea Fair Trade Commission's remedial procedure for objections.
An objection is filed by preparing a written objection and submitting it to the Korea Fair Trade Commission within 30 days from the date of receipt of the notice of the decision.
If, before bringing fair trade administrative litigation, a party filed an objection but still wishes to object, it may bring administrative litigation, and it may also bring litigation directly without filing an objection.
The procedure for bringing fair trade administrative litigation is as follows.
1. Submission of the Complaint (Filing of the Suit)
The complaint must include the following.
-Information on the plaintiff (the company) and the defendant (the Korea Fair Trade Commission)
-The specific content of the disposition and the resulting disadvantage
-The reasons and legal grounds for the judgment that the disposition is unlawful
-The relief sought (e.g., "The OO disposition shall be revoked.")
-A brief explanation of the supporting evidence
※ In practice, it is common to retain counsel to prepare and submit the complaint, and the relevant facts and grounds of unlawfulness must be clearly organized, as they form the foundation of the litigation strategy.
2. Service of the Answer
The Korea Fair Trade Commission usually submits an answer within 30 days.
The answer includes the following.
-A rebuttal as to the legality and legitimacy of the disposition
-A point-by-point rebuttal of the plaintiff's assertions
-Attachments such as the investigation report, hearing materials, and the commission's decision
Upon receiving the Korea Fair Trade Commission's answer, the plaintiff may prepare a brief to supplement its additional assertions or to rebut, and may also submit additional evidence.
※ There are also cases in which the exchange of written submissions by both sides continues several times.
3. Conduct of the Oral Argument Dates
These are usually held several times, and the principal proceedings are as follows.
-Confirmation of both sides' positions and organization of the core issues
-Assertion of evidence and determination of whether to admit it
-Examination of witnesses or appointment of an expert appraiser, if necessary
-Hearing of economic analysis materials or expert opinions
※ In practice, the company's legal officer or management may appear in person to explain the company's position, or an economic expert (an accountant, economist, etc.) may submit an opinion.
4. Pronouncement of Judgment
The judgment is rendered in one of the following forms.
-Plaintiff prevails (the disposition is revoked) → the Korea Fair Trade Commission's disposition becomes void, and the company is relieved of the disadvantage.
-Partial granting → where only the penalty surcharge is reduced, or only certain items are partially revoked
-Plaintiff loses (the disposition is upheld) → the disposition is confirmed as is, and an obligation to comply arises
If a party objects to the outcome of the judgment, it may appeal to the High Court, and a final appeal to the Supreme Court is also possible thereafter.
※ Because administrative litigation has a significant impact on a company's image and management strategy, a long-term strategy should be established that goes beyond the mere question of whether the disposition is revoked and also considers the possibility of linkage to criminal punishment, the response to media coverage, external investment confidence, and the like.
Principal Grounds on Which Fair Trade Administrative Litigation Is Brought
Behind the bringing of fair trade administrative litigation lies a judgment that the content of the Korea Fair Trade Commission's disposition is legally or factually unjust or excessive.
The following is a detailed explanation of the principal grounds for bringing such litigation.
▶Misapprehension of the Facts or Inadequate Evidence
This is a case in which, even though the structure of the company's conduct can hardly be regarded as competition-restricting, the Korea Fair Trade Commission issued a disposition based on a restrictive interpretation.
For example, where there was mutual negotiation in the course of the contract yet it is treated as unilateral coercion, or where the interpretation of the data in the investigation report has been distorted.
▶Errors in the Application of Legal Principles or Arbitrary Interpretation
Litigation is brought where, in matters in which the legal standards may be ambiguous or open to multiple interpretations—such as market definition, the assessment of competition-restricting effects, and the recognition of a concerted act—the Korea Fair Trade Commission applied the legal principles in a manner unfavorable to the company.
In particular, misapprehensions of legal principles frequently occur in the distinction between like and unlike markets.
▶Unjustness or Disproportion of the Penalty Surcharge Calculation Standards
The standards for calculating a penalty surcharge reflect the gravity of the violation, the scale of sales, the recurrence, and so on, but where the amount actually imposed is so large as to deal a blow to the company's management, or is set unreasonably high compared with similar cases, litigation contesting this is brought.
▶Procedural Defects
Where the company's right of defense was infringed during the investigation process, or where there is a procedural illegality such as the omission of a hearing procedure or the non-disclosure of essential documents, an objection as to procedural legitimacy may be raised.
3. Fair Trade Administrative Litigation | Risks a Company May Face
Fair trade administrative litigation goes beyond a mere objection to an administrative disposition and entails numerous risk factors that may deal a direct blow to corporate management.
▶Non-Reduction or Increase of the Penalty Surcharge: There are cases in which the surcharge is not reduced despite the filing of the suit, so that if the litigation strategy fails, the financial blow may be amplified.
▶Decline in Corporate Image Due to Confirmation of the Disposition: In particular, for listed companies or large companies subject to disclosure obligations, the "confirmation of a Korea Fair Trade Commission disposition" may have a negative impact on external credibility.
▶Possibility of Concurrent Criminal Punishment: Separately from the penalty surcharge disposition, where the violation is intentional or repeated, the Korea Fair Trade Commission may file an accusation with the prosecutors' office, and administrative litigation and criminal litigation may proceed simultaneously.
▶Litigation Costs and Prolonged Risk: The burden is considerable, including legal costs and the consumption of management response resources during the litigation period.
Corporate Response Strategies for Fair Trade Administrative Litigation
1. Prompt Response at the Pre-Disposition Stage
In particular, faithfully submitting opinions, explanatory materials, statements, and the like increases the possibility of mitigating the severity of the disposition.
The promptness and accuracy of the response at the early stage have a significant influence on the subsequent likelihood of litigation.
2. Securing Economic Analysis and Market Data
To contest these, empirical data on the market structure, market share, demand substitutability, and the like of the relevant industry are necessary.
Accordingly, securing an opinion prepared by experts or submitting reliable database analysis materials is decisive in persuading the court's judgment.
3. Establishing a Litigation Strategy in Cooperation with a Specialist Law Firm
In cooperation with specialist attorneys at a law firm, all issues (factual, procedural, legal) should be separated and organized, and rebuttal arguments should be organized systematically.
In particular, tactics such as the drafting of the relief sought, the evidence-admission strategy, and the summoning of witnesses where necessary are important.
4. Advancing the Strategy Through Analysis of Similar Precedents
The strategy should be made concrete by organizing the differences between dismissed cases and granted cases, ascertaining the courts' standards of judgment, and applying these to the company's own case.
5. Internal and External Communication Management in Preparation for Risks
In particular, a strategic response that prevents the deterioration of relationships with shareholders and business partners is important.
Daeryun's Assistance
Because fair trade administrative litigation adopts an exceptional two-tier system, it is important to receive the assistance of a specialist attorney who well understands the characteristics of the relevant procedure.
According to the 2024 trends in Korea Fair Trade Commission litigation announced by the Commission, the proportion of administrative litigation cases in which a final judgment was rendered last year and in which the Korea Fair Trade Commission prevailed was found to exceed 90%.
As this shows, one can see that where fair trade administrative litigation is brought objecting to a disposition of the Korea Fair Trade Commission, obtaining the desired result is very difficult.
Accordingly, to bring fair trade administrative litigation, you must proceed by seeking the assistance of a specialist attorney with extensive experience in resolving cases relating to the Korea Fair Trade Commission.
Daeryun has specialized knowledge of administrative objection procedures and experience handling cases relating to the Korea Fair Trade Commission. Its 🔗fair trade attorneys and attorneys specializing in administrative matters form a task force to accompany the client from the early stage of fair trade administrative litigation through to the pronouncement of judgment.
If you entrust this firm with a fair trade administrative litigation case, we will devote ourselves to preparing a strategy suited to the matter in order to remedy the client's rights.
Fair trade specialist attorneys provide consultation services in various forms, including on-site consultations, visit consultations, telephone consultations, and in-person consultations, according to the client's circumstances, and operate a 365-day, 24-hour legal consultation system.
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