SOUTH KOREA Law and Practice Contributed by: John H Choi, Han Soon Choi, Changhun Lee and Seungjun Woo, Shin & Kim
Other Developments Treble damages
seems that, recently, the number of criminal litigation cases being pursued by investigating agencies, sepa - rate from the KFTC’s referral, is increasing. Investigat - ing agencies are pursuing violators based on other laws that allow punishment of some violations of the MRFTA without the KFTC’s referral, such as the Criminal Act and the Framework Act on the Construc - tion Industry. In cases where the Prosecutor’s Office receives a self-report about cartels under the criminal leniency programme, it typically transfers the cases to the KFTC. However, there have been recent instances where the Prosecutor’s Office initiated its own inves - tigation and later requested a referral to the KFTC. In addition, there is a provision in the MRFTA that even if the KFTC determines that the requirements of refer - ral for criminal prosecution have not been met, if there is a request from the chairperson of the Board of Audit and Inspection, a minister of the Ministry of SMEs and Start-Ups (MSS), or an administrator of the Pub - lic Procurement Service (PPS) to the KFTC to make a referral, the chairperson of the KFTC must refer the matter for criminal prosecution. In recent years particularly, there have been an increasing number of cases where the minister of the MSS requested crimi - nal referrals. Thus, the provision of the MRFTA limits the KFTC’s exercise of the right to refer or not refer a case for criminal prosecution. According to the MOU between the KFTC, MSS, and PPS, the minister of the MSS and the administrator of the PPS are required to request a referral to the KFTC within four months after receiving the relevant decisions from the KFTC. Regarding the Antitrust Criminal Lawsuit, the current MRFTA removed the criminal punishment provision for certain conduct where there have been no cases of criminal punishment, and such punishment would not be in accordance with the legal system. Such con - duct includes that relating to M&A, some unfair trade practices (including refusal to deal, discriminatory treatment, exclusion of competitors, and conditional transactions), and resale price maintenance. As such, these types of MRFTA violations are no longer subject to criminal litigation.
When liability for damages arising from a violation of the MRFTA is at issue, the scope of the liability for damages borne by the perpetrator is generally limited to damage that actually occurred or is presumed to have occurred. However, when the MRFTA amended the relevant regulation in 2018, in the event that a person suffers damage due to collusion or prohibited retaliatory measures in connection with the unfair trade practices among the violations of the MRFTA, a new provision imposed damages liability on the busi - ness entity or business entities’ organisation (ie, an association formed by two or more businesses for the purpose of promoting common interests) that engaged in such conduct “to the extent that it does not exceed three times the damage incurred by the victim”. It also provided that, in the event that the business entity or business entities’ organisation can prove that there was no intent or negligence, then it does not bear such liability for damages. Private person’s injunction claim system The current MRFTA introduces a new system for a private person’s claim for an injunction. This system allows the victim of unfair trade practices (except for unfair support) to petition the court directly for prohibi - tion or prevention of infringing conduct without going through the KFTC. Since the current MRFTA recognis - es a victim’s right to injunctive relief, a victim can now request the suspension or prevention of unfair trade practice without having to wait for the KFTC’s meas - ures, so that infringement can be stopped promptly or so that damages can be prevented in advance. Note that the MRFTA’s private prohibitory injunction system and provisional disposition effected to pro - tect the right to injunctive relief has only rarely been invoked to date, and thus the court’s specific judg - ment criteria for the application factors have not been clearly established. Hence, when filing a lawsuit for prohibitory injunction in the future, it is essential to take heed of the specific judgment criteria used by the court.
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