Monopoly Regulation and Fair Trade Act | Assisting a Subcontractor Driven to the Brink of Closure by a Large Corporation's Reduction of Transactions and Securing 'Substantial Damages'

The client, Company A, was a small-scale business in the packaging and logistics field and a subcontractor that had maintained transactions with Company B, a large corporation in the domestic distribution industry, for more than 20 years.

Company A's dependence on these transactions was very high, to the extent that most of its revenue was generated through Company B.

However, Company B, without any reasonable justification, began to progressively reduce its order volume from Company A and, over the course of several years, cut it to less than half of the previous volume.

As a result, Company A fell into serious financial difficulty to the point that it could not pay employee wages and severance pay, and it reached the verge of closing down.

Unilateral Preparation of Documents Inconsistent with the Agreement

Company B initially notified Company A that it would transfer part of the volume to another company, and Company A, through consultation, agreed to a partial transfer.

Afterward, however, Company B unilaterally prepared and delivered meeting minutes that made it appear as though a volume transfer had occurred at a level different from what had been agreed.

Continued Reduction of Volume

Although the parties had reached a renewed agreement through further consultation to transfer only part of the volume, Company B managed the volume unstably, citing reasons such as inventory management, and thereafter continuously decreased its order volume.

As a result, Company A came to face serious difficulties in its workforce operations and in its overall management.

Shifting Responsibility After a Sudden Increase in Volume

Company B temporarily placed orders for a large volume and, in a situation in which its production conditions had deteriorated, pressured Company A, which found it difficult to handle the entire volume, by shifting the responsibility for the delivery delays onto it.

Failure to Honor the Promise of a Guaranteed Minimum Volume

When Company A gave notice of legal action, Company B promised to guarantee a minimum volume, but that promise was not honored.

On the contrary, it subsequently sent an official letter indicating that it might further reduce the volume.

Accordingly, Company A determined that resolution through consultation was no longer feasible and proceeded with legal action.

After the report was filed with the Fair Trade Commission, the counterparty recognized the legal risk and came to the negotiating table.

As a result, a settlement was reached between the parties without a separate investigation or sanction procedure, and the client was able to receive substantial compensation.

This is an instance in which accurate legal analysis and a strategic response at the early stage led to a practical resolution.

• Where a trading partner has unilaterally and substantially reduced the delivery volume
• Where a reduction of transactions has occurred in a situation of high dependence on a particular trading partner
• Where, despite a long-term trading relationship, the terms have been changed without a reasonable justification
• Where terms different from what was agreed have been unilaterally notified
• Where the reduction of transactions has caused significant difficulties in management

If your situation resembles the above, it may be worth reviewing whether the Monopoly Regulation and Fair Trade Act has been violated.

Drawing on experience accumulated in the field of fair trade, Daeryun Law Firm LLP offers clients practical solutions for the protection of their rights and interests.

If you need assistance with a related matter, you are welcome to schedule a 🔗consultation with a fair trade attorney who, drawing on experience at the Fair Trade Commission, handles fair trade matters, and to prepare a response to your concern.

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