Fair Trade Mediation Agency Announces 2020 Dispute Mediation Status
[Asia Economy Reporter Joo Sang-don] Last year, the number of cases related to transactions on online platforms such as delivery applications and open markets increased by nearly 60%.
On the 14th, the Korea Fair Trade Mediation Agency analyzed and disclosed the dispute mediation status for 2020.
The total number of cases received was 3,008, slightly down from the previous year (3,032 cases). However, for four consecutive years since 2017, more than 3,000 dispute mediation cases have been received annually.
Looking at the status by sector, the general unfair trade sector had the highest number with 976 cases. The subcontracting transaction sector had 897 cases, franchise business transaction sector 514 cases, and terms and conditions sector 510 cases, in that order.
By transaction sector, the number of cases related to terms and conditions and general unfair trade increased significantly.
In particular, the number of cases in the terms and conditions sector increased by 156% compared to the previous year (from 199 to 510 cases). This was due to a surge in online advertising agency-related disputes (from 98 to 320 cases), where scammers impersonated large portal companies to induce online advertising agency contract signings and then refused contract termination requests or demanded excessive penalties.
The number of cases in the general unfair trade sector also increased by 5% compared to the previous year (from 928 to 976 cases). Especially, cases related to online platform transactions such as delivery apps and open markets increased by about 59% (from 32 to 51 cases). The Mediation Agency analyzed that the increase in mediation applications from related businesses was due to the expansion of transaction volume through online platforms caused by the increase in non-face-to-face transactions due to COVID-19.
Examining the types of reasons for dispute applications, in the general unfair trade sector, among the total 976 cases, acts related to providing disadvantages accounted for 556 cases (57.3%), the highest number. This was followed by acts related to refusal of transactions with 118 cases, and acts related to setting or changing transaction conditions with 26 cases.
In the subcontracting transaction sector, among the total 897 cases, acts related to non-payment of subcontracting fees accounted for 601 cases (67.0%), the highest number. There were also 61 cases related to unfair subcontracting fee decisions and 51 cases related to unfair cancellation of consignment.
In the franchise business transaction sector, among the total 514 cases, violations of the obligation to provide the disclosure document in advance accounted for 97 cases (18.9%), the highest number. There were also 88 cases related to abuse of bargaining position and 80 cases related to violations of the prohibition on providing false or exaggerated information.
The mediation establishment rate was 76%, up 5 percentage points from the previous year (71%). In particular, the terms and conditions sector handled 479 cases, a 172% increase from the previous year (176 cases), while recording a mediation establishment rate of 81%, significantly exceeding the overall rate. A representative from the Mediation Agency explained, "This high mediation establishment rate can be seen as a result of the high trust in the Mediation Agency, which has accumulated expertise and know-how as a comprehensive mediation institution, leading dispute parties to actively accept mediation recommendations."
The direct damage relief amount received by small and medium-sized enterprises through dispute mediation in 2020 totaled 109.1 billion KRW across 1,308 cases where mediation was established. Including saved litigation costs, the total direct and indirect damage relief effect was 120.7 billion KRW, a 4% increase compared to the previous year (116 billion KRW). Especially in the subcontracting sector, although the number of cases handled decreased somewhat (by 17%) compared to the previous year, the direct and indirect damage relief effect rose significantly by more than 12% from 83.9 billion KRW to 93.8 billion KRW.
This year, there is a possibility of increased risk of disputes between businesses due to worsening business conditions such as the increase in closures of small and medium-sized businesses and small merchants caused by the spread of COVID-19. Accordingly, the Mediation Agency plans to continuously make efforts to provide fair and transparent mediation services based on expertise to relieve damages related to unfair trade practices taking advantage of the prolonged COVID-19 situation and the expansion of non-face-to-face transactions.
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