The Korea Fair Trade Commission said on the 9th it will raise the floor for "collusion penalty surcharges" to 10% of related sales from 0.5%. The move follows President Lee Jae-myung's remarks at a Cabinet meeting in Jan. that simply raising the ceiling on penalty surcharges is ineffective, saying, "What good is it if you make the (ceiling) 20%? They just work it so it ends up at 2%."
The Korea Fair Trade Commission (FTC) announced that it has prepared a draft amendment to the "Public Notice on Detailed Standards for Imposing Penalty Surcharges," with this as the core. The amendment to the penalty surcharge notice will undergo administrative pre-announcement from the 10th to the 30th and is slated to take effect next month.
The penalty surcharge system for collusion classifies the severity of violations into three levels and applies different base rates. For very serious violations, 10.5–20% of related sales is imposed as a penalty surcharge; for serious violations, 3–10.5% of related sales; and for violations with lower severity, 0.5–3% of related sales. Under the amendment, the base rate for very serious violations will be raised to 18–20%. Serious violations will be set at 15–18%, and violations with lower severity will also be increased to 10–15%.
Kim Geun-seong, adjudication management officer at the Korea Fair Trade Commission (FTC), said, "There has been criticism that the floor under the penalty surcharge notice was set too low, so the base rates actually applied did not reach the statutory ceiling," adding, "We are therefore significantly raising the floor of the base rates."
For unfair support and private interest appropriation, both the ceiling and floor of the base rates will be raised. ▲ Very serious violations: 120–160%→250–300% of the support/appropriation amount ▲ Serious violations: 50–75%→200–250% ▲ Violations with lower severity: 20%→100–200%.
With this notice revision, penalty surcharges on businesses that repeatedly violate the law will also be aggravated. Currently, if the law was violated once within five years, the surcharge is aggravated by 10%, with increases up to 80% (four or more times) depending on the number of violations. Going forward, the Korea Fair Trade Commission (FTC) will aggravate up to 50% for a first violation and up to 100% depending on the number of violations. In particular, for collusion, if there is any record of having been surcharged for collusion even once in the past 10 years, the surcharge will be aggravated by up to 100%.
The rate of penalty surcharge reductions will also be cut. Currently, cooperating with an FTC investigation can earn up to a 20% reduction, but this will be halved going forward. The reduction rate for voluntary corrective action will also be reduced to 10% from a maximum of 30%. The provision for a 10% reduction due to slight negligence will be deleted. A basis will also be established to ex officio cancel any reduction benefits applied in the original disposition if a party challenges the FTC's disposition through an administrative lawsuit and retracts statements during the process.