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Newsletter | August 2014, Issue 3
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ANTITRUST & COMPETITION
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KFTC’s Notification on Specific Types of Abuse of Superior Bargaining Position Against Distributors
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On May, 12, 2014, the Korea Fair Trade Commission (“KFTC”) announced the promulgation of the Notification on Specific Types of Abuse of Superior Bargaining Position in Continuous Resale Transactions (“Notification”) pursuant to Article 23 of the Monopoly Regulation and Fair Trade Law (“FTL”). According to the KFTC, the Notification is intended to help suppliers better understand which of their business practices may constitute an abuse of superior bargaining position, a type of unfair trade practice prohibited under the FTL.
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Below is a summary of the types of abuse of superior bargaining position that are identified as being problematic under the Notification.
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Unfairly Forced Sales
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Unilateral supplying un-wanted or un-ordered goods
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Imposing mandatory purchase requirement for goods with imminent expiration date, new products, unpopular products, or obsolete goods
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Unfairly Forced Economic Favors
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Shifting the cost of promotional activities or labor cost without prior agreement with distributors
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Forcing distributors to dispatch employees for suppliers
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Forcing distributors to donate funds for supplier’s business
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Unfairly Forced Sales Target
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Imposing disadvantages, such as early termination of distributorship, suspension of supply, or withholding monetary payments owed to the distributors for the sole reason of failing to meet the sales target
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Unfairly Unfavorable Treatment
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Unilaterally changing the transaction terms during the transaction period by adding unfair terms
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Prohibiting damage claims in the event of termination
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Setting forth unfair compensation standards for equipment provided by suppliers in the event of termination
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Forcing the interpretation of supplier over a disputed clause in the agreement
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Unfairly shifting the cost of return or refusing the return of defective goods
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Unfair reduction or suspension of sales promotion fund
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Unfairly treating the distributor as a retaliation for filing a complaint or report to the KFTC
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Unfair Interference with Business Operation
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Forcing distributors to participate in supplier’s promotional activities
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Requesting appointment, dismissal, or change of employment of distributor’s personnel or sales staff
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Demanding disclosure of trade secrets
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Unilaterally designating the business counterparties, business hours, sales territory, etc.
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Refusal or Avoidance of Order Records of Distributor
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Refusing or avoiding to provide distributor’s order records without a justifiable reason
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