The Korean Fair Trade Law Relating to the Subcontracting Field: A Critical Review on the Prevention of ‘Fixing Unreasonable Consideration’

Since the first comprehensive competition law was adopted in 1981, the Korean competition regime has developed the distinctive features of fair competition laws, demonstrating the socio-political goal of ‘economic democratisation’. The KFTC has applied Article 23 of the Korean competition act to achieve the multiple goals of the Korean competition regime. In particular, the development and enforcement of the Fair Transactions in Subcontracting Act (FTSA) highlight the rigorous governmental intervention in the private subcontracts for protecting a weaker party. In effect, the topic of FTSA has become one of the important themes as the number of cases has recently increased. In addition, there have been notable amendments to the Korean FTSA. However, some critics assert that excessive intervention can harm the process of individual freedom of contract and private autonomy. In particular, the issue relating to the practice of ‘fixing unreasonable consideration’ has been a hotly debated topic. There have been numerous cases for interpreting the scope of fixing unreasonable consideration in the industry of shipbuilding, and the Supreme Court judgment on DSME has provided the scope of application of this provision, which provides guidance for subcontracting parties. Therefore, it is timely to discuss the meaning of fixing unreasonable consideration and the problem of applying the relevant rule by looking at the recent case law.