The ceiling on penalty surcharges that the Korea Fair Trade Commission can impose for monopolistic violations by corporations with significant market power will rise sharply. Instead, criminal penalties that had applied to some types of violations will be abolished.
On the 30th, the Korea Fair Trade Commission (FTC) said it will push a system overhaul to raise the ceiling on penalty surcharges and streamline criminal penalty–centered sanctions in line with its policy to revamp economic crimes. The FTC said it will reduce criminal penalties but raise penalty surcharges to maintain deterrence against legal violations.
The Korea Fair Trade Commission (FTC) decided to raise the cap on ad valorem penalty surcharges for monopolistic conduct by corporations with significant market power from 6% to 20% of related sales. The FTC explained that although criminal provisions existed in the past, they were rarely applied in practice, and the level of penalty surcharges was low, providing insufficient deterrence.
The cap on penalty surcharges for collusion will also increase. The Korea Fair Trade Commission (FTC) decided to raise the ad valorem penalty surcharge limit for collusion from 20% to 30% of related sales. The cap on penalty surcharges for unfair trade practices will also be adjusted from 4% to 10%.
Some violation types will newly be subject to penalty surcharges. The Korea Fair Trade Commission (FTC) decided to impose penalty surcharges on four types, including circumvention of holding company and large business group system rules and violations of voting rights restrictions by financial and insurance companies. The move reflects the view that corrective orders alone may be insufficient as a sanction after abolishing criminal penalties.
The flat-amount penalty surcharge ceiling will also generally rise. The Korea Fair Trade Commission (FTC) decided to raise the flat-amount penalty surcharge cap for unfair support practices, where calculating sales is difficult, from 4 billion won to 10 billion won. The Franchise Business Act, Large-Scale Distribution Act, Agency Transactions Act, Fair Transactions in Subcontracting Act, and the Act on Fair Labeling and Advertising will also have their flat-amount penalty surcharge caps raised to 5 billion won.
Standards for surcharge aggravation on repeat violations will be tightened. The Korea Fair Trade Commission (FTC) plans to revise the system to raise the current 10% aggravation for one repeat offense to up to 50%, and allow aggravation up to 100% depending on the number of violations.
The Korea Fair Trade Commission (FTC) plans to submit related legislative amendments to the National Assembly in the first half of next year and complete revisions to the enforcement decree and notifications within the same period.