Damage Compensation Lawsuits for Companies on the Brink to Be Supported by "KFTC Evidence"

Mandatory Submission of KFTC Materials Upon Court Request

Expansion of Party Document Submission Orders to Cover “Proof of Violations”

A new pathway has opened for companies that have suffered damages from collusion, unfair trade practices, or technology theft to use case materials secured by the Korea Fair Trade Commission (KFTC) as evidence in damage compensation lawsuits by having them submitted to the courts.

On August 20, the KFTC announced that amendments to the “Monopoly Regulation and Fair Trade Act” (Fair Trade Act) and the “Act on the Fairness in Subcontracting Transactions” (Subcontracting Act)—which mandate the KFTC’s obligation to submit materials in compensation lawsuits, legislate the informant’s right to request reinvestigation, and rationalize the statute of limitations for subcontracting dispositions—were passed by the National Assembly’s plenary session.

Until now, companies victimized by collusion or technology misappropriation had to directly prove violations and the amount of damage in civil lawsuits. However, it was virtually impossible for them to obtain crucial evidence against large corporations holding such proof. Even when the court requested submission of case records from the KFTC, provisions requiring confidentiality from KFTC officials often limited the actual provision of materials.

With this legal revision, if it is difficult for litigants to obtain evidence through reasonable efforts, a new obligation requires the KFTC to submit materials after case processing is complete, in response to court requests. An explicit exception has also been established, exempting the KFTC from confidentiality obligations when submitting such materials. Even if the materials contain trade secrets, they may be reviewed in a limited manner subject to court designation if essential to proving damages, and a confidentiality order system will be introduced to balance the need to protect business secrets with the need for proof of damages.

The scope of “party document submission orders” that the court may issue against the opposing party has also been greatly expanded from “proof of damages and calculation of the amount” to “proof of the violation itself.” This system will now apply to all violations of the Fair Trade Act.

Procedural rights to enhance the transparency and credibility of KFTC case processing have also been strengthened. When the KFTC issues a non-prosecution or other non-disposition decision, it must notify the informant of the reasons in writing, and a legally codified “procedure for informants to request reinvestigation” allows the informant to file an objection within 30 days. The validity of reinvestigation requests will be reviewed by a “Reinvestigation Request Review Committee” that includes external members.

Additionally, during investigations of Subcontracting Act violations, the amended law excludes the time spent in the dispute mediation procedure from the KFTC’s statute of limitations period (three years). This addresses a legal loophole where extended mediation could lead to expiration of the statute of limitations and the consequent nullification of KFTC sanctions.

The amendments will be promulgated after being transmitted to the government and approved by the State Council, and will take effect one year after promulgation. The obligations and orders related to material submission will apply to damage compensation lawsuits filed after the law comes into effect.

This content was produced with the assistance of AI translation services.