Hello. Attorney Eom Sang-yun of Cheongchul Law Firm is here.

When engaging in transactions between businesses, it is common to suffer damages due to unfair practices such as exploitation of the other party's superior position, non-payment, and the misappropriation of technology. In such cases, the most powerful and effective means of remedying the damage and preventing recurrence is to report to the Fair Trade Commission (hereinafter referred to as “FTC”).

However, many people hesitate to report due to vague fears or complex procedures, or they may end up reporting without preparation, only to receive a 'no charges' disposition and feel frustrated.

Today, we will discuss the specific procedures and methods for reporting to the FTC, and strategies to achieve the intended goals.

[What is a Report to the FTC?]

A report to the FTC is when a business violates laws under the jurisdiction of the FTC such as the 「Monopoly Regulation and Fair Trade Act」 (Fair Trade Act), the 「Subcontracting Transactions Fairness Act」 (Subcontracting Act), or the 「Franchise Business Transactions Fairness Act」 (Franchise Act), and the victim of that violation notifies the FTC and calls for an investigation.

While a typical civil lawsuit focuses on damages between individuals, reporting to the FTC aims to eradicate unfair practices by imposing administrative and criminal sanctions such as corrective orders, fines, and criminal complaints. Thus, it can be an effective means to resolve disputes early in conjunction with a civil lawsuit or before it.

[How to Report]

Reporting to the FTC can be done primarily through in-person visits, mail, or online submissions. However, in practice, online submissions are the most common.

• Online Reporting: You can submit reports through the 'Unfair Trade Report' section on the Fair Trade Commission website (ftc.go.kr) or the 'Citizen’s Report' portal.

• Mail/In-person Reporting: Submit a written report to the local office (Seoul Office, Daejeon Office, Gwangju Office, Daegu Office, Busan Office) that has jurisdiction over the point of business of the alleged violator.

[FTC Case Handling Process]

Once the report is received, the case proceeds through the following stages. This process can typically take anywhere from a few months to over a year.

① Case Reception and Registration: The FTC registers the case within 10 days of receiving the report and begins the investigation.

② Fact Investigation: The assigned investigator will request submissions of evidence from the complainant and the respondent, and if necessary, conduct in-person investigations or site visits. The outcome of the investigation can vary depending on how well specific evidence and legal arguments to prove the illicit actions of the respondent are presented.

③ Presentation of Investigation Report: After the investigation is completed, the investigator prepares an 'Investigation Report' containing opinions on whether there has been a legal violation and the recommended actions. If a violation is recognized, the report is submitted to the committee (similar to a prosecution) and, if not, it will result in a no-charge finding (ending the investigation process).

④ Committee Deliberation and Resolution: A deliberation will be held once the investigation report is submitted. The complainant and the respondent can attend the deliberation date and make final statements, and the committee will decide (resolve) on the level of final sanctions (corrective orders, fines, complaints, etc.) based on that.

[Considerations When Reporting to the FTC]

Simply appealing to unfairness will not lead to sanctions from the FTC; you must adequately present evidence capable of proving the allegations of legal violations. Additionally, you must be able to appropriately respond to the needs of the investigator regarding supplements to the reporting facts, submission of materials, etc., to ensure that the case proceeds in the desired direction.

Furthermore, you should consider the following points to ensure that the purpose of the report is clearly and effectively conveyed, to prevent the case from being unjustly concluded.

First, you must organize the general information of the complainant and respondent, the report contents, and relevant evidence in accordance with the reporting format prescribed by the FTC. If the report does not meet the legal violation criteria, the investigator may request supplements to the report.

Second, it must be legally accurate regarding which specific type of legal violation (refusal to trade, abuse of trading position, hindrance of business activities, etc.) the actions of the other party correspond to. The FTC has different departments based on the types of cases; thus, if you assert a legal violation that is objectively difficult to accept, even if the facts are accurate, it could be concluded as no charges.

Third, you must systematically arrange and submit objective evidence such as contracts, emails, text messages, and recordings. If you submit unorganized materials like those for general civil complaints, the investigation of the case may not proceed quickly.

Fourth, there are statutes of limitations or investigation periods for violations of the Fair Trade Act and Subcontracting Act. If the statute of limitations has passed, sanctions cannot be imposed; therefore, it is necessary to verify that the content you intend to report is not past the deadline and to make a swift judgment.

Reporting to the FTC is a powerful means to correct unfair trading practices, but reporting hastily without proper preparation can lead to a situation where one fails to prove the allegations and only grants amnesty. Cheongchul Law Firm provides comprehensive legal services, including assistance with report writing, responding to investigations, and attending deliberations, with a team of attorneys specialized in fair trade. If you are unjustly suffering from issues related to unfair trade, violations of the Subcontracting Act, or violations of the Franchise Act, we encourage you to seek assistance from our experts to find solutions.

Cheongchul Law Firm consists solely of attorneys from the top five law firms in the country, prosecutors, and corporate legal teams, and not just one attorney but teams of specialized attorneys related to the case are formed to respond. Cheongchul provides comprehensive solutions beyond resolving specific issues, focusing on helping clients achieve their ultimate goals. If you need help achieving your goals, please do not hesitate to contact Cheongchul.