1. Reasons for Proposal

This Partial Amendment aims to promote predictability for law-abiding persons by specifying types of and criteria for prohibited acts concerning management activities, prescribe procedures where a Dispute Mediation Council notifies the court which has accepted the lawsuit of an application for dispute mediation and dispute mediation results in order to ensure the successful implementation of the suspension of proceedings by the court which has accepted the lawsuit, and expand the maximum mitigation of penalty surcharges to 70% to enhance the effectiveness of the voluntary correction and prompt damage relief.

2. Major Provisions

A. Newly insert specific types of interference with management activities (Article 11-2)

1) As the Amendment prohibits a large franchise and retail business operator from interfering in the management activities of a supplier or causing any other business entity to engage in such conduct by taking advantage of its position in a transaction, it is necessary to establish the specific types of interference with management activities prohibited under the law in the Enforcement Decree.

2) Prescribe acts of causing a supplier to receive instructions or approval for appointment and dismissal of the employees or other persons hired by a supplier, etc., and determination of their working area and conditions, acts of unjustly restricting the items, facility size, business hours, etc., of the supplier, etc., acts of interfering with promotional activities, such as the supplier, etc., carries out through another franchise, acts of interfering with transaction conditions including the price and quality of products that the supplier, etc., sells through another franchise, and acts of interfering with management activities of the supplier, etc., and  hinders free decision making, as specific types of interference with management activities.

3) Accordingly, promote law-abiding persons’ predictability.

B. Prepare procedures to notify the dispute mediation to the court of lawsuit (Article 23) 

1) The amended Act allows the judicial procedure to be suspended at the decision of the court which has accepted the lawsuit if the dispute mediation procedure and the lawsuit are in competition. This makes it necessary to prescribe the procedures where a Dispute Mediation Council notifies the court which has accepted the lawsuit of the application for dispute mediation and dispute mediation results. 

2) Prescribe that where the dispute mediation and the judicial procedure are carried out simultaneously, the Dispute Mediation Council shall notify the court which has accepted the lawsuit of the application for dispute mediation, etc., where the court which has accepted the lawsuit that received the notification from the council suspends the judicial procedure, the disputing parties shall notify the council, and the council shall carry out the mediation procedure and immediately notifying the court which has accepted the lawsuit when the mediation process reaches a resolution. 

3) Ensure the effective operation of the suspension of proceedings by the court which has accepted the lawsuit for dispute mediation cases.

C. Increase the maximum mitigation of penalty surcharges ([attached Table 1])

1) It is necessary to expand the maximum reduction of penalty surcharges to 70% to enhance the effectiveness of the voluntary correction and prompt damage relief.

2) Increase the maximum reduction according to the period and frequency of non-compliance from the current 50% to 70%.

3) Encourage violators to voluntarily compensate victims, thereby promoting prompt damage relief for issues involving small and medium-sized enterprises.