Businesses that engage in collusion more than twice within five years may face business suspensions or cancellations of their registrations and permits, depending on their industry. Additionally, the statute of limitations for collusion cases will be extended to a maximum of 15 years, and the authority for price re-determination will be explicitly defined.
The government and the Democratic Party of Korea announced these measures during a policy meeting held on September 28 at the National Assembly, outlining a legislative plan to eradicate repeated collusion.
To eliminate chronic collusion, the government and the party will focus on three areas: strengthening deterrence against collusion, increasing detection rates, and enhancing the effectiveness of corrective measures. They plan to pursue five amendments to the Fair Trade Act.
One key initiative is the introduction of a business suspension and registration cancellation system for repeat offenders. Businesses that have engaged in collusion more than twice in the past five years will face significantly increased penalties, including registration cancellations or business suspensions under specific laws.
The targeted sectors include 17 industries closely related to public life, such as safety and health, energy, environment, and transportation. Four sectors, including fire safety and electrical construction, will have grounds for registration cancellation or business suspension. The remaining 13 sectors, including petroleum refining and sales, pharmaceutical manufacturing, passenger and freight transportation, waste management, and high-pressure gas industries, will implement business suspension measures.
The Fair Trade Commission (FTC) will request the relevant ministries to impose registration cancellations or business suspensions on repeat offenders, and amendments to the Fair Trade Act and 17 individual laws will be made to facilitate this process.
The period for detecting collusion will also be extended. The statute of limitations for collusion cases that have not yet been investigated will be increased from the current seven years to ten years from the end of the collusion activity. The existing five-year statute of limitations from the start of an investigation will remain unchanged, allowing for a maximum enforcement period to extend from 12 years to 15 years.
Monitoring of collusion in educational sector bidding will be strengthened. The FTC will designate educational authorities as mandatory providers of bidding information to the bidding collusion indication analysis system (BRIAS). Since April, the FTC has been linking bidding information from educational authorities with the government procurement system, but this new measure aims to establish a legal basis for stable data acquisition.
Furthermore, the FTC will clarify the legal basis for reversing prices distorted by collusion. The current authority for price re-determination, based on 'other necessary corrective measures,' will be explicitly stated in the Fair Trade Act. This aims to restore prices to a level that reflects the competitive state prior to collusion.
The self-reporting reduction system will also undergo some adjustments. While benefits for reduced fines and prosecution will be maintained, no reductions will be granted for corrective measures, including price re-determination orders. The core of the leniency program, which includes reductions for fines and prosecution, will remain, but corrective measures aimed at restoring market order disrupted by collusion will apply to all participants in the collusion.
The government and the party plan to promptly introduce amendments to the Fair Trade Act and the 17 individual laws containing these measures and push for swift legislation. The FTC stated, 'We aim to eliminate chronic collusion that hinders our economy and enhance the vitality of the national economy.'
* This article has been translated by AI.
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