Skip Navigation
Select Matters

KFTC Closes Case Regarding Foreign Machinery Company’s Alleged Imposition of Disadvantages Against Distributor At Early Stage without Opening a Formal Investigation


Kim & Chang successfully represented a foreign company engaged in the manufacturing and sales of machinery in responding to a third-party distributor’s application for dispute mediation by the Korea Fair Trade Mediation Agency (the “KOFAIR”) and its filing of a complaint with the Korea Fair Trade Commission (the “KFTC”).  The KFTC investigation was ultimately closed and no formal investigation was initiated.

In its application for mediation to the KOFAIR and complaint filing to the KFTC, the distributor claimed that the company had used its superior bargaining position to impose unfair disadvantages (e.g., discontinuing the supply of products and raising the price of product parts) in violation of both the Monopoly Regulation and Fair Trade Law (the “FTL”) and the Fair Distributor Transactions Act (the “FDTA”).

Our firm’s representation commenced at the early stages of the mediation process, and focused on proactively responding to the initial inquiries by presenting the company’s position, explaining the relevant facts of the case (e.g., the transaction structure of how the client company supplied products to its distributors, and the relationship between the company and the distributor in question), and demonstrating that the company’s conduct did not constitute an imposition of unfair disadvantages.

As a result of such strategy and efforts, the KFTC closed its inquiry without initiating a formal investigation.  This case is meaningful in that the company was able to reasonably respond to a difficult dispute mediation process that would have otherwise continued for a significant period of time, including a separate investigation by the KFTC and follow-up civil litigation.