"Penalties for Unfair Trade Practices Should Be Used as Relief Fund for SMEs"

Difficulties in Proving Damages Lead Some SMEs to Bankruptcy Before Lawsuits
Proposal to Establish a "Relief Fund" Using a Portion of Penalties
SME Community: "We Must Create a Safety Net to Prevent Bankruptcies"

There has been a call for the establishment of a "relief fund for affected companies" using penalties imposed by the Fair Trade Commission, in order to protect small and medium enterprises (SMEs) that suffer from unfair trade practices by large corporations but are unable to receive compensation and face management crises as a result.

The Korea Federation of Small and Medium Business announced on the 12th that it held a legislative forum on "Utilization of Penalties and Support for Affected Small and Medium Enterprises" at the Win-Win Room of the Korea Federation of Small and Medium Business in Yeouido, Seoul.

This forum was organized to discuss legislative measures to support SMEs affected by unfair trade practices using penalties collected by the Fair Trade Commission, as current laws make it difficult for these companies to receive prompt relief and they consequently experience management difficulties.

The Korea Federation of Small and Medium Business held a legislative forum on "Utilization of Penalties and Support for Affected Small and Medium Enterprises" on the 12th at the Win-Win Room of the Korea Federation of Small and Medium Business in Yeouido, Seoul. Korea Federation of Small and Medium Business

Park Heekyung, an attorney from the Gyeongcheong Foundation, who delivered the keynote presentation, emphasized the need to establish a fund for victims of unfair trade practices to address the limitations of the current relief system.

Attorney Park stated, "Even when the Fair Trade Commission acknowledges a violation by the perpetrating company and imposes a penalty, the financial damages suffered by the victimized company are often left unaddressed for a long period, sometimes resulting in bankruptcy and other unreasonable outcomes." Park added, "Considering that the Fair Trade Commission recovers the perpetrator's unjust gains through penalty collection, a portion of these penalties should be allocated to a relief fund to support the losses of affected companies."

During the panel discussion, which was chaired by Lee Hwang, Dean of the Korea University School of Law, panelists Park Sehwan, Professor at University of Seoul; Jeon Jongwon, attorney at Law Firm Jeongnyul; Yang Chanhoe, Head of the Innovation Growth Division at the Korea Federation of Small and Medium Business; Park Miyoung, Legislative Investigator at the National Assembly Research Service; and Lee Seungkyu, Director of the Competition Policy Division at the Fair Trade Commission, offered various legislative opinions on supporting SMEs affected by unfair trade practices using penalties.

Professor Park argued that while the purpose of establishing a relief fund is good, it is necessary to clearly define the beneficiaries to prevent abuse. He said, "It is necessary to limit the scope of application and clarify the requirements, for example, to cases where it is clear that the SME cannot file a civil damages lawsuit, or where the unfair trade practice has been definitively confirmed by a court."

Attorney Jeon addressed concerns about the stable sourcing of funds for the new relief fund, stating, "If the penalties are large, there will be no problem securing funds, and conversely, if unfair trade practices decrease and penalties are reduced, there will be fewer companies in need of relief, so a lack of funds should not be an issue." He insisted that the establishment of the relief fund is absolutely necessary.

Kim Ki-moon, Chairman of the Korea Federation of Small and Medium Business, said, "For small-scale SMEs, it is never easy to confront large corporations backed by major law firms, even if they suffer damages from unfair trade practices. In reality, even if a lawsuit for compensation drags on and ends in bankruptcy, they cannot receive any support from the state."He added, "By establishing a relief fund for victims of unfair trade practices, we must create a safety net in advance to prevent the bankruptcy of affected companies and minimize the damage caused by unfair trade."