Criticism is mounting that leniency—voluntary reporting with reductions—the core system for investigating cartel cases, has been split between prosecutors and the Korea Fair Trade Commission, undermining its effectiveness.
Because the two agencies each operate their own leniency intake desks, corporations inevitably face confusion over where to report first. There are growing calls for an information‑sharing system between prosecutors and the Korea Fair Trade Commission (FTC) to promote leniency uptake and speed up cartel investigations.
According to legal sources on the 5th, in the sugar price‑fixing case involving CJ CheilJedang, Samyang Corporation, and TS Corporation, the corporations recognized as first in line for leniency by prosecutors and by the Korea Fair Trade Commission differed. Leniency is a system under which corporations that participated in collusion can be exempted from criminal referral or receive reductions in a penalty surcharge if they voluntarily report the collusion.
The problem is that the leniency benefit structures of prosecutors and the Korea Fair Trade Commission differ. Prosecutors exempt only the first in line from indictment, and for the second, they seek half the sentence. In contrast, the Korea Fair Trade Commission exempts both the first and second corporations from criminal referral and reduces the penalty surcharge by 100% and 50%, respectively. Depending on the order of reporting, indictment or the imposition of penalty surcharges in the tens of billions of won can hinge.
◇The "paradox" of being punished even after voluntary reporting
When leniency rankings diverge by agency, corporations' confusion grows even greater. For example, even if corporation A voluntarily reports first to prosecutors and is exempted from indictment, if corporations B and C cooperate first with the Korea Fair Trade Commission and are recognized as first and second, corporation A could still face referral by the Korea Fair Trade Commission and the imposition of a penalty surcharge. A business community official said, "If cases emerge where corporations cooperate with investigations yet cannot avoid punishment, corporations will inevitably hesitate to participate in leniency."
In legal circles, there is an opinion that prosecutors and the Korea Fair Trade Commission should share leniency information with each other to reduce such confusion. The idea is that, regardless of which agency receives the voluntary report, they should share information and coordinate leadership of investigation and inquiry depending on the nature of the case.
It is worth referring to the United States, where competition law is most developed. In the United States, the Department of Justice's Antitrust Division leads cartel investigations, but it is characteristic that it shares information and cooperates organically with the Federal Trade Commission (FTC), which corresponds to Korea's Korea Fair Trade Commission, to avoid overlapping work.
Prosecutors and the Korea Fair Trade Commission also share a consensus on the need for a leniency information‑sharing system. In the past, they twice pursued a memorandum of understanding (MOU) focused on sharing leniency information. However, it is known that the MOU ultimately fell through because they could not narrow differences over system design.
◇"Sharing leniency information would speed up handling of cartel cases"
If a leniency‑sharing system is introduced, the expected benefits are significant. First, as corporations' confusion is reduced, it can encourage participation in leniency. It would also lessen the burden of having to undergo overlapping investigations and inquiries by prosecutors and the Korea Fair Trade Commission.
There is also an outlook that the time required to handle cartel cases would be shortened. Until now, the Korea Fair Trade Commission has often referred cases close to the expiration of the five‑year statute of limitations for Fair Trade Act violations. Because of this, there has been internal discontent within prosecutors that investigation time is too tight.
Minister Jung Sung-ho of the Ministry of Justice also noted at a Cabinet meeting on the 3rd that "for cases the Korea Fair Trade Commission refers to prosecutors, the investigation period alone usually takes from a year and a half to as long as four years."
The Korea Fair Trade Commission's position is that, unlike prosecutors, it lacks compulsory investigative authority, and because of the "right to file objections," which ensures corporations' rights of defense, the inquiry period inevitably grows longer. Even so, legal sources say that cooperating with prosecutors from the outset can enhance investigative efficiency and shorten processing times.
However, it is reported that within the Korea Fair Trade Commission there is discomfort about jointly handling cartel cases with prosecutors. With President Lee Jae-myung even considering abolishing the commission's exclusive right to refer cases, there are concerns that sharing leniency information could inadvertently lead to a reduced role for the Korea Fair Trade Commission.
A legal community source said, "The president is urging swift investigations and stern punishment for cartel cases that threaten the livelihoods of ordinary people," adding, "Rather than putting organizational logic first, the two organizations need to take a broader, more inclusive approach."