The Korea Fair Trade Commission (the “KFTC”) conducted an investigation on whether Changshin INC. (“Changshin”) ordered its foreign manufacturing subsidiaries to increase the procurement service fee provided to Suheung (Changshin’s affiliate), thereby unfairly supporting Seheung. Various issues such as the method of calculating the fair market price in a transaction involving affiliates of a multinational corporation to examine for possible transfer pricing issues, the definition of the relevant market, the assessment for anti-competitiveness and the effect of involvement of the a specially-related party, were reviewed in this investigation.
Lee & Ko’s Antitrust & Competition Practice Group closely coordinated with the firm’s Tax Practice Group to argue that the characteristics of the transaction between affiliates of a multinational corporation should be taken into consideration in calculating the fair market price. By presenting the relevant facts and legal principles, Lee & Ko successfully persuaded the KFTC that there was no basis to conclude any improper exchange of funds between specially-related parties to trigger an unfair support of an affiliate in violation of law. Based on Lee & Ko’s persuasive arguments, the firm successfully convinced the KFTC not to seek criminal charges against the individuals involved in the investigation.