法律简讯Kim & Chang Legal Newsletter (2020 Issue 2) This issue includes: Korea Fair Trade Commission's Enforcement Plan for 2020 Launch of Bank's Ancillary Business for Big Data and Measures to Support Distribution of Big Data Asia Region Funds Passport Is Implemented in Korea in Accordance with the Amended Financial Investment Services and Capital Markets Act National Assembly Passes Amendments to the Monopoly Regulation and Fair Trade Law Amendment to the Korea Development Bank Act and Its Enforcement Decree to Establish the Key Industry Stabilization Fund Amended Guidelines on Corporate Governance Report and Recent Trends of ESG Reporting Recent Amendment to the Act on the Allocation and Trading of Greenhouse-Gas Emission Permits Amendments to the Subordinate Statutes of the Waste Control Act Coinsurance Is Introduced, Along with Eased Restrictions on Insurers' Management of Foreign Currency Assets Supreme Court Establishes Criteria for Application of the "Catch-All" Unfair Competition Provision Virtual Hearing in International Arbitration US Department of Commerce Enforces Countervailing Duty Regulations Against Countries with Undervalued Currencies Adoption of Customs Act Regulations on Overseas Direct Purchases Strengthens Responsibility of Purchasing Agents and Open Market Operators Amended Labor Standards Act Limits Use of Annual Paid Leave for Employees with Less Than One Year of Continuous Employment Supreme Court Finds That More Favorable Terms and Conditions of an Existing Employment Agreement Take Precedence over Amended Rules of Employment New Amendments to Capital Markets Act’s Enforcement Decree Heighten Standards for Replacement of Asset Management Company and Trustee/Custodian Implementation of Policy Reinforcing Duties of Internet Service Providers to Eradicate Digital Sex Crimes Update on Key Legislative and Policy Developments on Self-Driving Vehicles Kim & Chang Legal Newsletter (2020 Issue 2)2020.07.03
法律简讯Further Amendments to the Enforcement Decree of the Personal Information Protection Act Announced The draft amendments to the Enforcement Decree of the Personal Information Protection Act were first announced on March 31, 2020 and revised based on the opinion gathered from the interested parties on June 8, 2020 (the "First Amendments"). The Ministry of the Interior and Safety announced on July 14, 2020 the draft amendments which have been further revised following a review by the Regulatory Reform Committee and the Ministry of Government Legislation (the "Second Amendments"). Please refer to the attached summary for the key revisions in the Second Amendments. Although it is likely that there will be no further revision, there are a couple of remaining legislative steps remaining, such as deliberation and resolution at the Cabinet Meeting. [Korean version]2020.07.17
法律简讯KFTC Enacts Review Guidelines for Unfair Trade Practices in Supplier-Distributor Transactions On June 30, 2020, the Korea Fair Trade Commission (the "KFTC") enacted a set of Review Guidelines for Unfair Trade Practices in Supplier-Distributor Transactions (the "Guidelines"). We summarize below key details of the Guidelines, and recommend companies with third-party distributor networks in Korea to prepare for potential exposure to risk by assessing and addressing their current compliance status based on the Guidelines. [Key Details of the Guidelines] 1. Scope of Application The Guidelines clarify that the Fairness in Distributor Transactions Act (the "FDTA") applies not only when the distributor is a reseller or sells the supplier’s products/services on consignment, but also when the distributor sells the supplier's goods/services as agents or brokers. 2. Review Standards Superior Bargaining Position of Supplier In determining whether the supplier has a superior bargaining position, various factors should be considered in totality, including (i) product market and distribution market structure, (ii) difference in business capabilities between supplier and distributor, (iii) distributor's dependence on transactions with the supplier, (iv) characteristics of the transacted goods/services, and (v) other factors that make distributors subordinate to the supplier. Unfairness of a Transaction In determining whether a trade practice is unfair, the focus should be on whether the transaction itself was unfair, rather than the competition restricting effects or unfairness in the means of competition. In assessing whether a transaction is unfair, various factors should be considered in totality, including purpose of the conduct, distributor's intent, foreseeability, degree of economic disadvantage imposed on the distributor or the difficulty posed in carrying out business activities, customary trade practice, and relevant laws and regulations. However, in determining unfairness under Article 12 of the FDTA (prohibition of retaliatory conduct), the focus should be on the causal relationship between the distributors' action (e.g., filing a complaint with the KFTC, cooperating with the KFTC's investigation) and the supplier's retaliatory conduct, without considering whether the transaction itself is unfair. 3. Examples of FDTA Violations by Type of Conduct Forced Purchases (Article 6 of FDTA) Creating a situation where the distributor has no choice but to order products by continuously urging the distributor to purchase products, and imposing disadvantages if the distributor refuses to make the purchase Allocating carryover products so that each distributor has to purchase a certain amount, and unilaterally deciding the type and quantity of products to be supplied to each distributor When the distributor places an order for new or popular products, bundling such products with carryover or unpopular products the distributor does not want to purchase Forced Economic Benefits (Article 7 of FDTA) Planning a sales promotion event without prior discussion with the distributor, and unilaterally imposing the promotion costs onto the distributor Relocating products from one distributor to another for the supplier's own needs, and imposing the transportation costs onto the distributors without reasonable cause Forced Sales Targets (Article 8 of FDTA) When the distributor fails to meet the sales target, significantly reducing or delaying the supply of goods/services ordered by that distributor When the distributor fails to meet the sales target, supplying products or services at a higher price than other distributors, or applying disadvantageous discount rates without reasonable justification Imposition of Disadvantages (Article 9 of FDTA) During the term of agreement, unilaterally changing the criteria for sales commission or consignment fees to the distributor's disadvantage During the term of agreement, despite there being no change in the credit rating, etc., of the distributor, unilaterally demanding that the distributor provide additional collateral for credit purchases, or significantly raising the collateral amount Interference with Business Activities (Article 10 of FDTA) Interfering in the distributor's hiring of sales representatives, or restricting the total number of sales representatives Demanding that the distributor provide information such as a list of its customers, product sales prices, or history of financial transactions (however, for consignment sales, excluding when there is reasonable justification such as for settlement of sales commissions) Forcing the distributor to replace facilities or equipment or to carry out interior renovation work, even though there is no objective reason to believe the said facility/equipment/interior design has deteriorated or has defects in terms of safety and hygiene that significantly impedes the normal operation of business Refusal or Evading to Confirm Order History (Article 11 of FDTA) Unilaterally changing the distributor's order and later changing the order system so that the distributor may not look up its order history or order amounts Retaliation (Article 12 of FDTA) Refusing to renew or terminating the agreement with a distributor for reporting the supplier to the KFTC for violating the FDTA despite there being an automatic renewal clause in the distribution agreement [Korean version]2020.07.15
法律简讯Recent Government Updates Relating to Artificial Intelligence – Data Distribution and Commercialization One of the most critical elements in developing and vitalizing AI-based services and products is securing expansive AI learning database. Below is our update on the recent developments to build the legal framework and institutions to establish the infrastructure to promote distribution of data that may be used for AI learning in various industries including the financial sector. 1. MOTIE to Enact the Special Act on Promotion of Innovative Growth for Industries Based on Digitalization On May 6, 2020, the Ministry of Trade, Industry and Energy (the "MOTIE") held a kick-off meeting for the task force to enact the "(draft) Special Act on Promotion of Innovative Growth for Industries based on Digitalization" (the "Act on Promotion of Digital Growth"). The meeting was held as a part of the government's “Policy for Smarter Industries,” which aims to apply cutting-edge digital technologies to industries such as manufacturing, energy and distribution. About 20 experts from the manufacturing, AI, big data and 5G industries as well as academia, research and legal sectors joined the meeting and discussed, among other topics, issues relating to the proprietary rights, transactions and business opportunities involving industrial data, ways to promote the use of industrial data and AI, and plans for the task force to enact the "Act on Promotion of Digital Growth." The MOTIE, through its press release, announced that in recognition of the growing importance of industrial data worldwide, the government will work to establish the Act on Promotion of Digital Growth as a means to further advance policies, laws, systems and necessary infrastructure related to collecting and utilizing industrial data in Korea that fall behind other countries, and thereby seek to expedite the digitization of industries based on industrial data and AI. Starting from the recent kick-off meeting, the MOTIE plans to establish three divisions, each dedicated to general management, system and support for the task force, respectively, and to conduct research on similar legislations at home and abroad, analyze related studies and collect opinions of experts from industries, academia and legal circles so that the Act on Promotion of Digital Growth can be enacted and approved by the National Assembly by the end of this year. 2. FSC Launches Financial Data Exchange to Promote Data Economy On May 11, 2020, the Financial Security Institute (the “FSI”) launched the "Data Exchange," i.e., a major financial platform in the big data industry. According to the press release of the Financial Services Commission (the “FSC”), the Data Exchange is currently in trial period and is set to function as a transaction platform to exchange non-identifiable data and business information between suppliers and buyers. According to the FSC’s operation plan, the Data Exchange will expand its function as a one-stop service platform to facilitate the transaction of financial data and non-financial data of various industrial sectors among financial institutions and other companies. In addition to the launch of the Data Exchange, the FSC will publish data distribution guidelines to establish regulations on data distribution, provide data transaction vouchers to promote data transactions in the early stages, authorize financial companies to include big data as their ancillary service, and run a council for financial data. The efforts of the MOTIE and the FSI to establish the infrastructure to utilize industrial and financial data will lay the foundation for an ecosystem to distribute AI learning data in the relevant industries, thereby promoting growth of AI industries. [Korean version]2020.06.04
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