Cabinet gives approval to law revisions

The Fair Trade Commission (FTC) said yesterday that four laws related to economic democratization including a regulation on allocating and sharing work among affiliates of conglomerates and subcontracting were approved at a cabinet meeting yesterday.

At a plenary session July 2, the National Assembly passed amendments to the Fair Trade Act that regulate work-sharing among affiliates, Franchising Act and a Subcontracting Act, which deals with unfair contracts.

Also approved were advertising law amendments to strengthen protection of the rights of victims of unfair or false ads.

The revision to the Display Advertisement Act will take effect in three months and the amendments to the Fair Trade Act, Franchising Act and the Subcontracting Act will be implemented after six months.

Changes to the Fair Trade Act included regulations prohibiting large corporations from providing unfair advantages to affiliates or owner families through allocation of work.

The main amendment of the Fair Trade Act changed the definition of unfair support subject to the regulation from providing “significant” advantageous support to “quite” advantageous support.

It also established a new regulatory basis for the practice of taking middleman transaction fees by commissioning products and services to related parties and companies.

In addition, it also established a regulation prohibiting families of conglomerates or related parties from preferable treatment in the allocation of work.

The revision to the Franchising Act prohibitions franchise headquarters from arbitrarily forcing franchisees to improve store environments and unilaterally setting territories of business operation.

According to the revision, headquarters also should also bear a certain amount of the cost of store improvements.

The FTC expects the revisions will reduce unfair practices by headquarters, protect the rights of subcontractors and benefit consumers by regulating labeling and advertising.

BY kim jung-yoon [kjy@joongang.co.kr]