Kim & Chang successfully represented an auto parts maker (the “plaintiff”) in its appeal to revoke an administrative fine and corrective order imposed by the Korea Fair Trade Commission (the “KFTC”) in 2016 for involvement in a bid-rigging cartel in 2009 concerning the price and annual price reduction (APR) of automotive compressors.  The Seoul High Court ruled in favor of the plaintiff by revoking the KFTC’s sanctions, and the Supreme Court of Korea later denied the KFTC’s appeal, confirming the Seoul High Court’s decision.

The key issue in this case was the statute of limitations.  This was because an amendment to the Monopoly Regulation and Fair Trade Law (the “FTL”) that went into effect on June 22, 2012, had changed the statute of limitations for claims arising from violations of the FTL to expire five years after the “commencement date of an investigation” in cases where the KFTC had initiated an investigation or seven years after the end date of an alleged violation if the KFTC had not initiated an investigation.  Previously, the FTL provided that the statute of limitations expires five years after the end date of an alleged violation for all cases.  The amendment was intended to apply to the first case subject to the KFTC’s investigation after the effective date of the amendment.  However, the amendment did not define the “commencement date of an investigation” which affects the determination of the starting and expiration dates for purposes of the statute of limitations.  Further, the KFTC had provided through an amendment to its Rules on Case Handling Procedure that the “commencement date of an investigation” in cases where a leniency application had been filed was the earliest of (i) the date of request for submission of materials, (ii) the date of request for interview, and (iii) the date of the on-site investigation.

Throughout the litigation process, Kim & Chang argued that in light of the intended purpose of the statute of limitations (to enhance legal stability and prevent the abuse of an authority’s power to impose dispositions) and the FTL, the starting date of the statute of limitations in investigation cases, including a case where a leniency application has been filed, must be the date the leniency application was filed with the KFTC.  By presenting various materials supporting the foregoing legal principle and conducting rigorous fact-finding, our team was able to establish that the starting date of the statute of limitations for this case should be when another auto parts maker filed a leniency application, which occurred prior to the FTL amendment.  In 2018, the Seoul High Court accepted such arguments and revoked the KFTC’s corrective orders and administrative fines, and this decision was affirmed by the Supreme Court in February 2021.