If big-box marts, department stores and others unfairly interfere to prevent suppliers from doing a transaction with competitors, the Korea Fair Trade Commission will revise the Large-Scale Distribution Business Act so it can impose a penalty surcharge of up to 5 billion won. The cap on the penalty surcharge will be raised tenfold from the current 500 million won.
Instead, the provision for criminal punishment that "can impose a prison sentence of up to two years" will be removed. The government and the Democratic Party of Korea judged that criminal punishment takes too long until a conviction is finalized, reducing the effectiveness of sanctions.
On the morning of the 30th, the government and the Democratic Party of Korea held a party-government consultation and released the "second plan to rationalize economic crimes and penalties" with these details. Earlier, President Lee Jae-myung, at an emergency economic review meeting in Jul., said, "There are questions about whether it truly aligns with international standards to impose additional criminal sanctions beyond economic and fiscal sanctions," and directed the rationalization of economic-related criminal penalties, including easing the breach of duty offense.
In the "first plan to rationalize economic crimes and penalties" released on Sept. 30, the government said it would overhaul 110 statutory provisions, including abolishing the breach of duty offense under the Criminal Act. The party and government said they would further ease 331 provisions related to economic criminal penalties. A government official said, "Because criminal punishment takes a long time until a conviction is finalized, there are limits to promptly correcting illegal acts." The official added, "To effectively deter serious illegal acts, we decided to strengthen monetary liability."
The plan released that day includes numerous statutes under the purview of the Korea Fair Trade Commission (FTC), such as the Agency Transactions Act and the Franchise Business Act. The party and government decided to raise the penalty surcharge from 500 million won to 5 billion won when a headquarters unfairly interferes in a branch's management activities. The provision allowing a two-year prison sentence will be removed. In addition, under the Franchise Business Act, a franchise headquarters must sign a franchise contract only after 14 days have passed since providing the disclosure document. If this is not followed, they decided to raise the penalty surcharge from the current 500 million won to 5 billion won instead of imposing a two-year prison term.
Amid a recent surge in subscriber data leaks, the party and government decided to raise by fivefold the cap on penalty surcharges that can be imposed when mobile carriers and others fail to make efforts to prevent the leakage of subscriber location information, from 400 million won to 2 billion won. The provision for a one-year prison sentence will be removed.
By contrast, for violations likely due to an employer's simple mistake, the party and government will remove criminal punishment provisions and switch to imposing fines. If a corporation other than a financial investment business operator uses "financial investment" in its company name, it can currently face a one-year prison sentence, but going forward it will be changed so that a fine of up to 30 million won can be imposed. Also, in cases of exaggerated advertising regarding the ingredients or effects of fertilizer, the current penalty is up to two years in prison or a fine of 20 million won. The prison term will be removed.
Provisions that harshly punish minor violations or mistakes by the public will also be revised. For example, if an apartment management office does not keep documents related to the collection of maintenance fees, it can currently face up to one year in prison, but this will change to a fine of 10 million won. In addition, if trees are caused to wither to death in national parks and elsewhere, the current penalty is one year in prison or a fine of 10 million won. The one-year prison provision will be removed.