On February 12, 2014, the Korea Fair Trade Commission (hereinafter the “KFTC”) held a full commission meeting where it deliberated and approved proposed amendments to the Notification on Detailed Standards for Imposition of Administrative Surcharges (hereinafter the “Administrative Surcharge Notification”) which amends, among others, the standards for reducing administrative surcharges imposed against enterprisers that violate the Monopoly Regulation and Fair Trade Act (hereinafter the “MRFTA”).  

  1. Amendments to the Administrative Surcharge Notification Reduces the Scope of the KFTC’s Discretion in Imposition of Administrative Surcharges
  • Various critics, including the National Assembly and the media, have continuously noted that, in order to effectively deter companies from violating the MRFTA, the standards for reducing administrative surcharges under the current Administrative Surcharge Notification needs to be reasonably modified.  The KFTC affirmatively accepted such criticism and amended the Administrative Surcharge Notification to reduce the scope of its discretion in imposing administrative surcharges.
  1. Key Amendments
  • Greater scope of repeat violators subject to increases in administrative surcharges

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  • Newly established a minimum increase rate of 5-10% of the administrative surcharges based upon the acts of the party involved (e.g., whether a party played a leading role in the cartel, engaged in retaliatory measures, interfered with or evaded the investigation, high ranking officers were involved or committed the same violations over the most recent 3 years).
  • Specify the grounds for reducing administrative surcharges were categorized based upon acts of the party involved and, based on the degree of such acts, the maximum reduction rate was reasonably adjusted.

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  • Heighten standards for reducing administrative surcharges based upon capability to pay at the stage of determining the imposed administrative surcharge amount

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  1. Conclusion
  • The amended Administrative Surcharge Notification becomes effective as of August, 2014 and the current Administrative Surcharge Notification will apply to conduct which concludes prior to the implementation of the amended Administrative Surcharge Notification.
  • In view of the heightened risks of incurring greater administrative surcharges, companies should tighten their internal supervision and compliance training programs of officers and employees to prevent potential violations of the MRFTA.