Experts Call for Quality Over Quantity in Fair Trade Commission Regulations

 Concerns are rising as the Fair Trade Commission (FTC) continues to strengthen regulations, including expanding its authority for investigations, increasing fines, and making the delivery of review reports public. Experts agree on the necessity of enhancing the FTC's market surveillance capabilities but emphasize the need for procedural controls and a predictable legal enforcement system to match the expanded powers.

◆ "Regulatory Changes Depend on the Administration... Need to Reduce Business Uncertainty"

According to a comprehensive report by Ajou Economic Daily on July 2, experts identified key issues surrounding the FTC's recent regulatory tightening, including policy shifts based on the administration, increased burdens on businesses, the need for precision in enforcement, and the direction of regulations for new industries.

Go Eun-hee, a lawyer at Jeonghyang Law Firm, noted that "the enforcement direction of the FTC inevitably changes according to the policy orientation of the administration," adding that under governments emphasizing economic democratization, the FTC's authority has been relatively strengthened. She pointed out that while past issues focused on franchise abuses, recent attention has shifted to stricter regulations and penalties for large corporations.

Baek Kwang-hyun, a lawyer at Barun Law LLC, remarked that "this is not just about strengthening sanctions; the paradigm of law enforcement has shifted from 'post-response' to 'prevention.'" He acknowledged the intention to enhance market transparency and fairness but expressed concern that even minor compliance failures could lead to significant financial burdens for companies.

◆ "Focus on Quality Over Quantity in Enforcement... Strengthen Procedural Controls"

As the FTC's authority expands, there are calls for enhanced procedural controls to ensure the fairness of investigations and reviews. Although the number of fines imposed by the FTC has increased, there have been repeated instances of courts overturning decisions or refunding fines, indicating a need for 'selection and concentration' in enforcement.

From 2017 to August of last year, the FTC ordered companies to pay 624.7 billion won in fines and 47.4 billion won in refund interest due to court rulings. Even when fines are refunded, companies bear the costs of litigation and management uncertainty, underscoring the need for greater precision in enforcement.

In response, Go called for the establishment of internal checks commensurate with the expanded authority. She stated, "The FTC has limitations in verifying facts, but the impact of its decisions can be devastating for businesses," emphasizing the urgent need for a balance between authority and control. She also suggested implementing an internal evaluation system similar to the prosecution's not guilty assessment to reduce instances of court cancellations of FTC decisions.

Ji Cheol-ho, former vice chairman of the FTC, also advocated for a focused approach, stating, "Rather than indiscriminately expanding the scope of investigations, it is preferable to concentrate on significant cases." He added that thoroughly investigating key cases would lead to decisions that withstand scrutiny in court, which would also be effective in preventing similar violations.

Lee Hwang, a professor at Korea University Law School, echoed similar sentiments, noting that the FTC has long faced criticism for the quality of case handling due to insufficient personnel and time relative to the number of cases. He suggested that with recent personnel increases, the focus should be on improving the speed of case processing and enhancing the precision of review reports and resolutions rather than merely increasing the number of investigations.

Baek also emphasized the need to enhance the objectivity of economic analysis, due process, and the completeness of proving illegality, stating, "We must prioritize the 'quality' of enforcement over the 'quantity.'"

However, Choi Seung-jae, a professor at Sejong University Law School, called for a multifaceted approach. He stated, "It is inappropriate to evaluate the FTC solely based on the likelihood of losing cases, as one cannot simply refrain from enforcement due to the possibility of loss. Improvements should be made not only at the enforcement stage but also throughout the litigation process."

◆ "In New Industries, Predictability is More Important than Strong Regulations"

In sectors such as platforms and artificial intelligence (AI), creating an environment where companies can clearly predict regulatory standards is seen as a top priority.

Ji emphasized the importance of a gradual approach, citing the historical development of the Fair Trade Act. He stated, "Rather than imposing strict regulations on new industries from the outset, we should establish standards gradually to allow businesses to operate within the law." He noted that just as cartel fines have gradually increased from 1% to 30%, new industry regulations require similar adjustments.

Baek argued that guidelines should serve to provide clear evaluation criteria rather than merely determining legality. He explained, "Maximizing predictability is the starting point for balancing regulation and innovation, rather than simply reducing regulatory intensity."

Lee warned against the risks of misjudging legality in new industries, stating, "New industries often lack sufficient precedent, increasing the likelihood of misjudging illegality. If legitimate efficiency-seeking actions are wrongly deemed illegal, it could stifle corporate investment and innovation in new businesses. Therefore, swift yet precise judgments must be made based on adequate personnel and expertise."

Choi suggested that traditional competition law enforcement may be insufficient in new industries and recommended that the FTC bolster its personnel and resources to fulfill its fundamental role of promoting competition.