Reason for Amendment
The amendment aims to establish criteria for reasonably considering the specific nature of the parent-subsidiary relationship when determining the illegality of providing unjust benefits to related parties, as per Article 47 of the Monopoly Regulation and Fair Trade Act.

Key Contents
a. Establishment of Criteria to Reasonably Consider the Specific Nature of Parent-Subsidiary Relationships

• In transactions between wholly-owned subsidiaries, the specific nature of the relationship is considered, with a lower likelihood of unjust benefits being provided to related parties in terms of:

  • The intent to provide benefits,

  • Economic benefits resulting from the benefit-providing act,

  • Benefits accrued to related parties.

• However, the use of the parent-subsidiary relationship to evade regulation or engage in illegal activities will also be considered.

• The specific nature of the parent-subsidiary relationship is judged by whether the wholly-owned subsidiary loses its independence and whether the parent company exercises full control over the subsidiary as part of its own business.

b. Establishment of Safe Harbor for Transactions Between Wholly-Owned Subsidiaries

• A safe harbor is established where the following four conditions are met, in which the application of the law may be excluded:

  1. The total wealth of the related party does not increase due to the benefit-providing act.

  2. The benefit-providing act is solely for the purpose of increasing the efficiency of the wholly-owned subsidiaries, without other objectives.

  3. The benefit-providing act does not result in harm to creditors or third parties.

  4. No violation of other laws occurs.

• If all four conditions are met, the act is judged not to be unjust.

c. Terminology Revision

• The foreign term “recall” is changed to “Manufacturing Defect Correction (Recall)” to standardize the terminology.