This article was published on March 12, 2025, at 4:05 p.m. on the ChosunBiz RM report site.
A corporation was caught by the Fair Trade Commission for participating in four collusion acts. For three of them, voluntary reporting and cooperation with the investigation were recognized, resulting in a full exemption from the penalty surcharge. However, for the remaining case, voluntary reporting and cooperation were not recognized, leading to a penalty surcharge of several hundred million won.
In such cases, how can one reduce the penalty surcharge? Food company Harim reportedly confirmed at the beginning of the year that it won a ruling allowing for a reduction of the penalty surcharge in a lawsuit against the Fair Trade Commission over a "chicken collusion" incident. ChosunBiz investigated what legal arguments Harim used to win.
◇ Harim in 'chicken collusion' exempt from penalty surcharge for three cases... faced a penalty surcharge of 7.8 billion won for the remaining case
Harim was caught by the Fair Trade Commission for the "chicken collusion" case between 2019 and 2022. It was suspected of colluding on the volume and sale prices in four areas: chickens for chicken, breeding chickens, native chickens, and samgyetang chickens. Collusion is referred to as the 'biggest public enemy of the market economy' because it severely infringes on consumer rights. The Fair Trade Commission also imposes strict penalties for collusion.
Harim was fully exempted from the penalty surcharge in three areas: chickens for chicken, breeding chickens, and native chickens. It was applying Article 51 of the Enforcement Decree of the Fair Trade Act, which provides for a reduction of the penalty surcharge for corporations that voluntarily report or cooperate with investigations. Since collusion is conducted secretly, it is not easy to detect. Therefore, the Fair Trade Commission has introduced a system to reduce the penalty surcharge for corporations that voluntarily report or cooperate with investigations to aid in the detection and punishment of collusion.
However, Harim was imposed a penalty surcharge of 7.8 billion won in the field of samgyetang chickens. Although Harim applied for a reduction of the penalty surcharge, the Fair Trade Commission did not accept it, determining that Harim could not be seen as cooperating with the collusion investigation. As a result, Harim filed a lawsuit against the Fair Trade Commission in April 2023, requesting the cancellation of the rejection of the penalty surcharge reduction application.
◇ Harim proves the requirements for 'additional reduction'... Court says 'If other collusions are reduced, samgyetang chicken should be reduced'
The trial of this case was conducted at the Seoul High Court. Cases involving penalty surcharges from the Fair Trade Commission are conducted by trying them directly at the Seoul High Court as an exception to the three-instance system before going up to the Supreme Court.
Harim invoked the 'additional reduction' clause stipulated in Article 51, Paragraph 1, Subparagraph 4 of the Enforcement Decree of the Fair Trade Act. This clause states that if a corporation receives a reduction of the penalty surcharge due to voluntary reporting or investigation cooperation for collusion A, it may receive a reduction for collusion B even without separate voluntary reporting or investigation cooperation.
In response, the Fair Trade Commission argued that Harim must have separate voluntary reporting or cooperation with the investigation to qualify for a reduction in the penalty surcharge for samgyetang chickens. Otherwise, there are concerns that the additional reduction system could be misused to weaken sanctions against collusion.
Ultimately, the court sided with Harim. It stated that, as Harim claimed, the 'additional reduction' clause of the Enforcement Decree of the Fair Trade Act does not require separate voluntary reporting or investigation cooperation. The court also pointed out that the Fair Trade Commission explained this same point in a press release about the additional reduction clause in 2005.
The Fair Trade Commission did not appeal to the Supreme Court, resulting in the Seoul High Court's ruling being confirmed. In this case, the law firm Taepyeongyang represented Harim.
An attorney specializing in fair trade cases said, "This ruling shows that if a reduction is granted for any collusion case through voluntary reporting and cooperation, the effect extends to related collusion cases, resulting in a subsequent reduction of the penalty surcharge. Since the additional reduction system was introduced to encourage voluntary reporting and cooperation in collusion cases, it has been interpreted legally to broaden the scope of reductions."