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Editorial

Overview

A significant amount of domestic activity in the Korean market over the past year has focused on the employment sector, in particular relating to the disputes arising from the jurisdiction’s singular ‘ordinary wage’ policies.

A number of class action lawsuits are currently pending before the Korean courts and the substantial retrospective wage pay-outs that could be ordered are potentially ruinous for small and medium sized companies. These companies are therefore choosing their counsel carefully, and many of the country’s biggest firms – including Lee & Ko and Kim & Chang – have been highly active in this area, as have Bae, Kim & Lee LLCYulchon, Yoon & Yang LLC and Shin & Kim.

Elsewhere, lawyers report a steady increase in outbound transactions and investment, fuelled largely by the importance the Korean government is now attaching to such activity. Korean companies are still mainly active in Asia and the US in this area, but European markets and projects are starting to be explored. There has also been a small spike in capital markets activity.

For foreign firms entering the market, the competition is stiff. A number are well positioned to compete with the domestic market leaders for cross-border corporate, banking and M&A work, but all are having to identify a USP to guarantee prosperity in the long term.

Firms in the spotlight

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Legal Developments in South Korea

Legal Developments and updates from the leading lawyers in each jurisdiction. To contribute, send an email request to
  • Proposed Legislation for Environmental Pollution Damage Compensation Has Passed National Assembly

    On December 10, 2014, the proposed legislation for the Environmental Pollution Damage Compensation and Recovery Act (the “Environmental Damage Compensation Act”) was passed by the National Assembly by unanimous votes of the present members. This Act will enter into force one year after the date of its promulgation, provided that, however, the obligation to subscribe environmental liability insurance under Article 17 will be enforced 18 months after tis promulgation.
  • [South Korea] Proposed Tax Law Changes for 2015

    On August 6, 2013, the Ministry of Strategy and Finance announced proposed tax law amendments for 2015, most of which would take effect on January 1, 2015 if enacted into law. The main items as currently proposed are summarized below but are subject to change during the National Assembly’s legislative review later this year.
  • [South Korea] Regulations on Subcontracting, Franchising and Distribution to be Amended

    On September 30, 2014, the Korea Fair Trade Commission (the “KFTC”) announced plans to amend regulations regarding the subcontracting, franchise and distribution sectors. In particular, the KFTC identified 12 action items that address the propriety and need for certain rules, and aim to mitigate burdens on industry. The KFTC plans to submit the relevant bills to the National Assembly and finalize the amended Enforcement Decrees by the end of 2014, and to update the subordinate regulations by the first quarter of 2015.
  • South Korea: Court Decisions Since the Supreme Court Rulings on Ordinary Wage

     
  • Court Decision on Collusion Case Regarding Compensation for Commission Rate Tied to Personal Life..

       Court Decision on Collusion Case Regarding Compensation for Commission Rate Tied to Personal Life Insurance Products   Following the Korea Fair Trade Commission (“KFTC”)’s correction order and imposition of administrative fines on December 15, 2011 against 16 life insurance companies for their engagement in unfair concerted action (cartel), consumers that purchased the insurance policies (the “Complainants”) brought a number of civil actions against these 16 life insurance companies.   On April 25, 2014, and on June 27, 2014, the Seoul Central District Court issued judgments on a number of these civil cases in favor of the life insurance companies on grounds that the aforementioned life insurance companies had not been conclusively found to have engaged in unfair concerted action.
  • Essilor’s Proposed Combination with an Optical Lens Maker in Korea is Blocked

    In its press release on March 17, 2014, the Korea Fair Trade Commission (the "KFTC") blocked the proposed acquisition of 50% shares by Essilor Amera Investment Pte. Ltd. (a subsidiary of Essilor International S.A., the largest optical lens maker in the world) in Daemyung Optical Co., Ltd. (the second largest optical lens maker in Korea) citing inter alia the likely lessening effect on price competition and the probable future abuses of the enhanced market power. On top of the expressed competitive concerns, the KFTC observed that allowing foreign firms to acquire local firms and turn them into their local sub-contractors worsens the competitive market structure of the domestic optical lens industry.
  • Recent Issues of Data Protection Regulation in Korea

    The Personal Information Protection Act ("PIPA") was enacted as a general law of personal information in March 2011 to fulfill the need for presiding rules to govern personal information protection. In fact, there have already been a number of special laws governing personal information protection in various special areas and cases, such as The Act on Promotion of Information and Communications Network Utilization Information Protection ("Network Act") governing information and communications services, and the Use and Protection of Credit Information Act ("Credit Information Act") governing personal credit information. Special laws prevail over the general law, when in conflict with individual articles of the general law.
  • Comprehensive Measures to Protect Personal Data in the Financial Sector

    The following is a summary of the press releases made by the Financial Services Commission on 10 March 2014. These are action items and policies that the FSC and relevant ministries are seeking to implement. The following measures have developed from a series of measures previously announced since the data leakage from the three credit card companies were revealed last January.
  • Essilor’s Proposed Combination with an Optical Lens Maker in Korea is Blocked

    In its press release on March 17, 2014, the Korea Fair Trade Commission (the "KFTC") blocked the proposed acquisition of 50% shares by Essilor Amera Investment Pte. Ltd. (a subsidiary of Essilor International S.A., the largest optical lens maker in the world) in Daemyung Optical Co., Ltd. (the second largest optical lens maker in Korea) citing inter alia the likely lessening effect on price competition and the probable future abuses of the enhanced market power. On top of the expressed competitive concerns, the KFTC observed that allowing foreign firms to acquire local firms and turn them into their local sub-contractors worsens the competitive market structure of the domestic optical lens industry.
  • Ordinary Wage: After the 2013 Supreme Court Decision

    1. First Trial Court Decision on Employer's Good Faith Argument On December 18, 2013, the Supreme Court of Korea made an en banc decision that ordinary wage includes regularly paid fixed bonus amounts. The Supreme Court also expressly noted that if an employer is able to prove that (i) there is an agreement between the employer and the labor union that fixed bonuses are excluded from ordinary wages and (ii) paying employees for past underpayment of overtime wages will cause a substantial detriment to the management or a major threat to the existence of the company due to the unexpected financial burden, then employees' claims for past underpayment can be denied based on the principle of good faith. However, the Supreme Court did not provide specific criteria for such denial, which caused controversy over the definite scope of application of its judgment (please refer to our newsletter of December 19, 2013 in this regard).

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