(1) Reasons for Proposal

Since the Fair Agency Transactions Act came into force, there have been continuous efforts to improve the system and enhance the effectiveness of law enforcement by revising applicable laws and aligning their sub-laws. Nevertheless, there are still concerns about unfair practices resulting from suppliers having the upper hand in transactions. In this regard, to effectively prevent and improve unfair practices in agencies and enhance their rights and interests, this Act aims to explicitly specify the rights of agencies to organize in an effort to increase their bargaining power, introduce compensation of three times damages for retaliatory actions and a consent resolution system to expand practical remedies for agencies, and create a bottom-up standard agency contract establishment/revision procedure and the basis to recommend best transaction practices to encourage voluntary improvements of agency transaction practices.

(2) Major Provisions

A. Create a bottom-up standard agency contract establishment/revision procedure (Article 5-2)

1) There are some limitations in the current standard agency contract establishment/revision procedure led by the Fair Trade Commission, which cannot fully reflect urgent demands or actual needs. 

2) Prepare a basis that allows suppliers, agencies, and business organizations consisting of such suppliers or agencies to request the Fair Trade Commission to establish and revise the standard agency contract.

B. Explicitly specify the rights of agencies to organize (Articles 11-2 and 12)

1) The lack of legal basis to establish an agency organization in the Act makes agencies reluctant to organize and act collectively, although an agency organization, once organized, can communicate difficulties to the supplier or respond to unfair practices.

2) Explicitly specify the rights of agencies to organize a business organization and prohibit disadvantages to organizing, joining, or working in such an organization. 

C. Prepare a basis to recommend best transaction practices (Article 12-3)

1) There are some limitations in penalty-based, after-the-fact regulations in terms of the time required to resolve a case or additional remedy procedures required for damages, which makes it necessary to actively use best transaction practices in each business to encourage more diverse and innovative improvements in transaction practices.

2) Prepare a basis to recommend best transaction practices, which allows the Fair Trade Commission to determine best practices by businesses and recommends that suppliers comply with these practices.

D. Prepare a basis to provide and entrust agency-related training and consultation (Article 22-2)

1) It is difficult for the Fair Trade Commission’s staff to take sole responsibility for providing training and consultation to many agency owners, although continuous training and consultation and promotion of the improved system are necessary to prevent disputes and ensure good transaction practices for agencies.

2) Allow the Fair Trade Commission to provide education, training, and promotion to suppliers and agencies and entrust this to its designated agency.

E. Introduce a consent resolution system (Articles 24-2 and 24-3)

1) In the event that an agency’s damage is caused by unfair practices of a supplier, the Fair Trade Commission's corrective action alone is limited to appropriate relief, and it is necessary to seek practical and direct compensation and prompt damage relief for the agency through the consent resolution to resolve the legal instability of the supplier earlier and to reduce the time and cost of investigations, lawsuits, etc. 

2) Introduce a consent resolution system and define the application, initiation, and resolution requirements and charges for compelling compliance with the consent resolution system. 

F. Introduce compensation of three times damages from any retaliatory action (Article 34)

1) It is necessary to introduce compensation of three times damages for a retaliatory action, which is a malicious act of interfering with remedies for the rights of agencies and perpetuating unfair practices, so as to encourage the elimination of retaliatory actions.

2) Expand the scope of compensation of three times damages for any retaliatory action and specify that the supplier has no liability for compensation if there is no gross negligence and willful misconduct by the supplier.