The Fair Trade Commission at the Government Complex Sejong in Sejong City. (Photo by Yoo Dae-gil)
South Korea’s competition watchdog will change how it calculates administrative fines, shifting the sales base period from the business year immediately before a violation to the business year immediately before the violation ends. It will also raise penalties for retaliation in the agency and franchise sectors, allowing fines to be increased by up to 30% when businesses retaliate over reports to the Fair Trade Commission.
The Fair Trade Commission said April 30 it will seek public comment on proposed amendments to enforcement decrees under the subcontracting, franchise and distribution laws from that day through June 9. It also said it will issue an administrative notice through May 20 on revisions to its fine guidelines under the subcontracting, franchise, distribution and agency laws. The changes are part of the fine-system overhaul announced last year.
To deter repeat violations, the FTC will strengthen the cap on fine increases so that even a single prior violation within the past five years can raise a fine by up to 50%, and repeated violations can raise it by up to 100%, depending on the number of offenses. The agency said the move is aimed at preventing repeated illegal conduct such as collusion.
The FTC will also tighten its response to retaliation. It already increases fines when a business retaliates because someone reported it to the FTC or sought dispute mediation. In the agency sector, the maximum increase for retaliation will rise to 30% from 20%. In the franchise sector, where there had been no separate rule, the FTC will add a basis to increase fines by up to 30% for retaliation.
Grounds and ranges for fine reductions will be narrowed. Previously, companies could receive reductions of 10% each — up to 20% total — for cooperating with investigations and deliberations. Under the revision, a reduction of up to 10% will apply only when a company cooperates throughout both the investigation and deliberation stages.
The FTC will also cut the reduction available for voluntary corrective action. A reduction of up to 50% had been possible, but it will be limited to up to 10% and only when the effects of the violation have been substantially removed. In addition, the FTC will create a basis to revoke, on its own authority, a reduction granted for cooperation if a company later reverses its statements during litigation.
The Fair Trade Commission said April 30 it will seek public comment on proposed amendments to enforcement decrees under the subcontracting, franchise and distribution laws from that day through June 9. It also said it will issue an administrative notice through May 20 on revisions to its fine guidelines under the subcontracting, franchise, distribution and agency laws. The changes are part of the fine-system overhaul announced last year.
To deter repeat violations, the FTC will strengthen the cap on fine increases so that even a single prior violation within the past five years can raise a fine by up to 50%, and repeated violations can raise it by up to 100%, depending on the number of offenses. The agency said the move is aimed at preventing repeated illegal conduct such as collusion.
The FTC will also tighten its response to retaliation. It already increases fines when a business retaliates because someone reported it to the FTC or sought dispute mediation. In the agency sector, the maximum increase for retaliation will rise to 30% from 20%. In the franchise sector, where there had been no separate rule, the FTC will add a basis to increase fines by up to 30% for retaliation.
Grounds and ranges for fine reductions will be narrowed. Previously, companies could receive reductions of 10% each — up to 20% total — for cooperating with investigations and deliberations. Under the revision, a reduction of up to 10% will apply only when a company cooperates throughout both the investigation and deliberation stages.
The FTC will also cut the reduction available for voluntary corrective action. A reduction of up to 50% had been possible, but it will be limited to up to 10% and only when the effects of the violation have been substantially removed. In addition, the FTC will create a basis to revoke, on its own authority, a reduction granted for cooperation if a company later reverses its statements during litigation.
* This article has been translated by AI.
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