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[Fair Trade] Penalty imposed against company for being an improper business entity prior to spinoff does not affect the business newly created through spinoff 3/7/2018

I. Background  

This case involves a disposition rendering a bid result of a business newly created after spinoff (plaintiff) null and void due to a penalty imposed against Company K (from which the new business was created after spinoff) before spinoff.


Company K was imposed a fine by the Korea Fair Trade Commission (KFTC) for taking part in a bid collusion in the past, as well as a penalty (which restricted the company from taking part in bids for a period of six (6) months) from the authorities (local municipality) that notified the company of the above KFTC disposition, for being an improper business entity.  Accordingly, Company K was in a position where it was unable to take part in any bids for projects planned by the national authorities, local municipalities and public institutions.

After being imposed with the penalty restricting the company from taking part in bids, Company K spun off its public bid business division and created the plaintiff.  Company K had been in the process of carrying out the spinoff procedures and the spinoff date was somewhat delayed as the procedures required more time and the date arrived some days after the date the company was imposed with the above disposition that restricted the company from taking part in bids.

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