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Photo = Yonhap news |
[Alpha Biz= Paul Lee] SEOUL, South Korea – June 12, 2025 — A South Korean court has ruled in favor of Ottogi Co., Ltd. and its long-time OEM partner MyeonSarang, ordering the cancellation of a government directive that sought to end their business relationship based on small business protection regulations.
The Seoul Administrative Court’s 12th Division (Presiding Judge Kang Jae-won) on Wednesday ruled that the Ministry of SMEs and Startups (MSS) must revoke its November 2023 order, which had instructed the two companies to terminate their decades-long OEM contract.
MyeonSarang, a noodle and sauce manufacturer, has supplied OEM (Original Equipment Manufacturing) products to Ottogi for over 30 years. However, under Korea’s "Small Business-Suitable Industry Designation Act", large corporations are restricted from entering or expanding into certain designated industries, including noodle manufacturing, to protect small business livelihoods.
The law makes an exception for large firms that outsource production to small businesses via OEM contracts—as long as annual shipment volumes remain within 130% of the historical average.
In April 2023, MyeonSarang was reclassified as a mid-sized enterprise, disqualifying it from the small business protections. Ottogi subsequently applied for special approval from the MSS to continue the relationship under reduced volume terms, proposing to cap orders at 110% of the historical average, well within the legal threshold.
However, the MSS rejected the request and ordered Ottogi to completely halt OEM transactions with MyeonSarang and secure a new supplier. The agency argued that OEM arrangements with mid-sized firms are not permissible under the regulation, regardless of volume limits.
Ottogi and MyeonSarang challenged the order in January 2024, arguing that the MSS ruling violated the spirit of the law and infringed upon their commercial rights. The court had previously granted a partial injunction in February 2024, allowing continued transactions during the litigation.
The latest ruling marks a major legal victory for both companies and could set a precedent for how government-designated “suitable industries” are interpreted in the context of long-standing commercial partnerships and corporate growth.
The MSS has not yet announced whether it will appeal the decision.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
