The Fair Trade Commission (FTC), often referred to as the "economic prosecutor," is expanding its oversight, increasing the burden on businesses. While the rationale of establishing fair economic practices and protecting consumers and small enterprises is clear, the aggressive nature of its investigations, fines, and the disclosure of review reports is raising concerns about corporate risks.
Experts are calling for improvements in the FTC's strict law enforcement to enhance corporate rights, procedural transparency, and predictability. They argue that strong penalties alone cannot ensure a fair economy; precise actions and clear standards are essential to mitigate corporate risks. This article examines the dual nature of the FTC's role in a five-part series. <Editor’s Note>
The FTC's investigations and penalties are emerging as a new source of uncertainty for corporate management. Amid economic slowdowns, global supply chain adjustments, and intensified competition in artificial intelligence (AI), businesses are under pressure to make swift decisions and bold investments, with FTC risks adding significant burdens to overall management.
Since the current administration took office, there has been a noticeable strengthening of fair economic policies, leading to an expansion of the FTC's role and authority. The agency has ramped up its investigations and increased the number of fines imposed, and it has recently begun disclosing the fact that review reports for major cases are being sent out. These reports, which contain the opinions of FTC examiners, are not final judgments, but they expose companies to reputational risks from the investigation's outset.
Fines Surge Despite Fewer Cases
According to the FTC's "2025 Statistical Yearbook" released on June 28, the number of cases received by the agency last year was 2,205, a 6.8% decrease from the previous year (2,365 cases). This marks a second consecutive year of decline. The number of reported cases fell by 8.2% to 1,133, while ex officio cases decreased by 5.2% to 1,072.
However, the trend in fines is quite the opposite. Last year, fines were imposed in 194 cases, a 56.5% increase from the previous year's 124 cases. Although the number of cases received has decreased, the fines imposed have reached their highest level in a decade.
This shift indicates a change in the FTC's approach to case management. The decline in case filings suggests a reduction in new disputes or reports in the market. Yet, the surge in fines indicates that the FTC is making more proactive sanction decisions during the processing of cases.
The total amount of fines was 340.173 billion won, down 19.5% from the previous year (422.661 billion won). However, this decrease in total fines does not necessarily mean a reduction in corporate burdens. The structure has shifted from concentrating large fines on a few major cases to imposing fines across a broader range of cases.
For businesses, the increased likelihood of being subject to sanctions is a greater concern than the size of fines per case. Previously, the main risks were associated with large collusion or conglomerate cases, but now even relatively smaller cases could attract fines. The FTC's sanctions appear to be expanding from focusing on specific large cases to encompassing a wider range of corporate activities.
The proportion of ex officio investigations remains high. Last year, ex officio cases accounted for 48.6% of all cases, with 1,072 investigations initiated without any reports. This means that nearly half of the cases can be investigated at the FTC's discretion, creating uncertainty for businesses that must make management decisions while being aware they could be investigated at any time.
This year, the FTC is pursuing reforms to its fine assessment system, increasing penalties for repeat violations, strengthening sanctions against refusal to cooperate with investigations, and expediting case processing. The challenge is that while these measures may enhance the efficiency of case handling, they could also increase the burden on businesses to defend themselves. If the threshold for initiating investigations and imposing fines is lowered, the FTC risk could evolve from a mere legal issue to a significant factor affecting investment, transactions, and overall management strategies.
However, not all FTC cases lead to final sanctions. Among the 2,404 cases processed last year, 969 cases, or 40.3%, were resolved without sanctions, including findings of no wrongdoing, termination of review procedures, or cessation of investigations. When voluntary corrections are included, more than seven out of ten cases concluded without separate sanctions.
The fact that many cases end without findings of wrongdoing or sanctions indicates that FTC investigations do not always confirm illegal activities. Nonetheless, companies bear substantial costs from the investigation stage, including document submission, legal reviews, employee responses, and explanations to business partners. Even without sanctions, the investigation itself incurs costs. Thus, despite a numerical decline in cases, it is difficult to argue that the FTC risk felt by businesses has decreased.
Costs Remain Even After Winning Cases
The recent disclosure of review reports for major cases by the FTC is also seen as a factor increasing the burden on businesses.
Review reports contain the results of investigations and the opinions of examiners, representing a stage prior to final decisions. However, if the fact that a review report has been sent and the details of the allegations become public, consumers, investors, and business partners may perceive the company as one under suspicion of wrongdoing.
In fact, there have been numerous instances where the FTC's judgments have been overturned by the courts. For example, in 2020, the FTC imposed a fine of 64.7 billion won on SPC Group affiliates for unfair support to SPC Samlip, but the Supreme Court canceled the fine. Similarly, in the case of price collusion among ramen manufacturers, the FTC imposed a large fine, but the Supreme Court ruled that collusion was difficult to establish. In the case of Hyundai Mobis's dealer pressure incident, the FTC's fines, corrective orders, and criminal complaints were all ultimately overturned. Legal disputes regarding fines in the cases of Kakao Mobility's call allocation and Hyundai Steel's scrap collusion are also ongoing.
The issue is that even if a company ultimately wins in court, it is challenging to recover costs already incurred. The expenses from years of litigation, along with reputational damage, reduced transactions, and delayed investments, cannot be easily restored by a final court ruling.
The rate of lawsuits filed against FTC cases was 13.8% last year, the lowest level since 2013 (12.0%). However, most cases that are litigated tend to lead to prolonged legal disputes, making it difficult to conclude that the burden felt by companies has decreased.
Strict law enforcement against collusion, unfair support, and unfair trade practices is essential for maintaining market order. However, there is a growing call for ensuring that corporate predictability and rights to defense are also protected as administrative investigations and sanctions expand. Even if FTC decisions are overturned in court years later, the reputational damage and operational disruptions that occurred during the process are not easily reversible. Balancing the establishment of fair competition and the stability of corporate activities is a challenge that the FTC must address.
* This article has been translated by AI.
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