The Fair Trade Commission completed its re-investigation into the collusion allegations regarding the dwellings mortgage loan ratio of the four major domestic banks and has begun sanction procedures.
According to the financial sector on the 22nd, the Fair Trade Commission sent an audit report containing collusion allegations against the four banks, including KB Kookmin, Shinhan, Hana, and Woori Bank, on the 18th. The audit report corresponds to the prosecution's indictment documents and contains findings judged by Fair Trade Commission examiners as possibly violating the law.
The banks are under suspicion of having shared information regarding the ratio of dwellings mortgage loans, totaling about 7,500 cases, and aligning their respective LTV criteria to similar levels. LTV is a key indicator that sets the borrowing limit when executing mortgage loans. The Fair Trade Commission believes that collateral loan conditions were effectively coordinated in this process, ultimately hindering market competition.
The banks maintain that it was merely an information exchange. They argue that because each bank's LTV criteria were not uniform and maintained a certain level of difference, it is difficult to view this as a restriction on competition. They are also rebutting claims that there was any unfair profit.
This issue was supposed to be decided by the Fair Trade Commission at two plenary meetings last year in 2023, but it was prolonged as the commission ordered a re-investigation, citing the need for further verification of facts. Following this, the Fair Trade Commission conducted on-site investigations of each bank on Feb. 12 and 17 of this year and re-drafted the audit report after approximately two months of additional investigations.
The prosecutors' recommendation for a complaint contained in the first report was excluded in the final version. Instead, the criteria for 'related sales revenue' that is crucial for calculating penalties were significantly expanded. Initially, only the amount of new loans related to LTV was used as a basis, but this time, the loan size due to deadline extensions was also included. The Fair Trade Commission calculates the penalty amount by multiplying the imposition rate, considering the severity of the violations, by the relevant sales revenue. Consequently, it raises the possibility that the penalty amount could exceed the initially projected hundreds of billions of won.
If the Fair Trade Commission makes a final sanction decision regarding this matter, it will be the first case where the 'collusion by information exchange' clause established by the fair trade law revision in 2020 is applied. This case could significantly influence future precedents and administrative standards concerning whether market competition limits can be recognized solely from information exchanges, rather than simple price collusion or partitioning.
The Fair Trade Commission plans to hold a plenary meeting to discuss whether to impose sanctions after gathering opinions from each bank. Since most of the disputes over the issues were already raised during last year's plenary meeting, the remaining procedures are expected to proceed swiftly.
A Fair Trade Commission official stated, 'We cannot confirm the specific factual circumstances or the content of the report for individual cases.'