The Fair Trade Commission said it will toughen the penalty surcharge for unfair support practices such as funneling work to owner families of corporations.
According to the Fair Trade Commission on the 23rd, Chairperson Ju Biung-ghi announced this policy direction at a briefing with the press corps on the 21st. In opening remarks, Ju said, "Regardless of whether they are large corporations or mid-sized companies, we will impose stronger sanctions on unfair expansions of control, such as funneling work during the succession of management rights by owner families."
◇ Fair Trade Commission chairperson: "The penalty surcharge must be strengthened... legal revisions under review"
At the briefing, Ju was asked, "Will you strengthen the penalty surcharge for funneling work?" Ju said, "As a first step, we need to improve how we apply the current law so that the penalty surcharge is strengthened." Ju added, "We are also reviewing legal revisions." Ju went on, "We are taking a comprehensive look at the penalty surcharge framework and plan to strengthen it so that sanctions are effective."
Groups such as the Economic Reform Alliance have pointed out that the Fair Trade Commission imposes a penalty surcharge that is too small compared with the gains corporations obtain from unfair support. The Fair Trade Commission sets the penalty surcharge by multiplying the unfair support amount by a certain percentage in light of the seriousness of the case. They say there is considerable room for the commission's discretion to come into play in assessing that "seriousness."
As unfair support methods by corporations have diversified and become more complex, cases in which it is difficult to calculate the support amount are increasing. In such cases, the Fair Trade Commission levies a penalty surcharge by multiplying 10% by the scale of the transaction between corporations. Critics say this results in a penalty surcharge that is smaller than the actual gains affiliates received. An official at the Fair Trade Commission said, "The intent is to improve how we operate within the current legal framework so that the penalty surcharge aligns with the seriousness of unfair support acts."
◇ Harder to avoid "private benefit appropriation regulations"... exclude treasury shares when calculating equity ratios
The Fair Trade Commission plans to expand the scope of companies subject to the ban on unfair support known as "private benefit appropriation regulations." Currently, companies subject to these regulations are those in which an owner family holds at least 20% equity or companies in which that company holds more than 50% equity. The Fair Trade Commission decided to exclude treasury shares from the total number of issued shares when calculating equity ratios. The move responds to criticism that a high proportion of treasury shares lowers the owner family's equity ratio, allowing them to avoid the private benefit appropriation regulations.
In addition, the Fair Trade Commission said it will pursue a special law to prevent food delivery application (app) operators from charging excessive fees to self-employed workers. Passage of the Online Platform Fairness Act (Onple Act), a campaign pledge by President Lee Jae-myung, is effectively unlikely to proceed. The Onple Act is a bill to regulate unfair transaction practices by large online platform operators. Chairperson Ju said, "It is true that it is difficult to proceed with enacting the Onple Act due to trade issues," adding, "Even under the current legal framework, there are tools to regulate platforms."