DR & AJU represented a Korean automobile parts manufacturer on complaints of alleged violations of the Monopoly Regulation and Fair Trade Act (“MRFTA”) and the Fair Transactions in Subcontracting Act (“FTSA”), which were filed with the Korea Fair Trade Mediation Agency (“KFTMA”) and the Korea Fair Trade Commission (“KFTC”), respectively. The manufacturer received a “freedom from suspicion” (no probable cause) decision on the alleged violation of the FTSA and a “withdrawal of complaint” on the alleged violation of the MRFTA.

The basic facts of the case were as follows: The Korean automobile parts manufacturer (“Service Recipient”) delegated to another Korean company (“Service Provider”) certain services related to the manufacture of the products distributed by the Manufacturer in and outside of Korea (e.g. inspection of the products). The Service Recipient and the Service Provider had transacted on an intrapreneur basis for several years before the terms of the transaction were changed to an outsourcing basis and the Service Provider argued that the consideration received for the services provided was unfair. At the same time, the Service Recipient asserted that the calculation of the service fee was unfair, which made it difficult for the Service Recipient and the Service Provider to resolve the matter amicably.

Under the circumstances, the Service Provider filed an application for mediation of a subcontracting dispute and a fair trade dispute with the KFTMA, arguing that the Service Recipient caused substantial damage to it by arbitrarily setting the service fee (wage scale) too low. However, the application for mediation was not accepted; this prompted the Service Provider to file a complaint with the KFTC alleging that the Service Recipient was in violation of the MRFTA and the FTSA. This resulted in the commencement of the regulator’s official investigation. DR & AJU represented the Service Recipient, focusing on the facts of the case, including the circumstances and method by which the service fee was determined and the applicable legal principles, such as the method for determining service fees under the FTSA.

The KFTC granted “freedom from suspicion” (no probable cause) with respect to the Service Provider’s allegations regarding service fee and a “closing of evaluation procedure” disposition with respect to the Service Provider’s argument relating to the refusal of request for fee raise. The complaints relating to the MRFTA were closed on the grounds of “withdrawal of complaint.”