Use the Lexology Getting The Deal Through tool to compare the answers in this article with those from other jurisdictions.

General

General attitudes

What is the general attitude of business and the authorities to competition compliance?

Over the years, there has been increased recognition in Korea by both companies and the regulators regarding the importance of voluntary compliance efforts. Against this backdrop, in 2001, the Korea Fair Trade Commission (KFTC) formally recognised the concept of compliance programmes (CP) that provide the framework for companies to voluntarily monitor for and enforce competition compliance.

Businesses generally take the view that a CP provides a valuable means for setting clear expectations regarding employee conduct, preventing violations in advance and addressing violations that are discovered in an efficient manner. A robust CP may also have public relations benefits, by increasing consumer trust and helping the company to show that it operates in a transparent and ethical manner.

The authorities also view CPs favourably because voluntary compliance efforts by the industry reduce the cost of the government’s enforcement of competition law, and have engaged in various efforts to encourage companies to strengthen their internal compliance mechanisms.

Government compliance programmes

Is there a government-approved standard for compliance programmes in your jurisdiction?

In October 2008, the KFTC published the Rules on Operation of and Incentives for Fair Trade Compliance Programmes (CP Operation Rules) for the first time, which provide certain incentives to companies whose CP meets prescribed criteria (see questions 4 and 6). The CP Operation Rules have been recently amended effective in June 2016.

Applicability of compliance programmes

Is the compliance guidance generally applicable or do best practice and obligations depend on a company’s size and the sector of the economy it operates in?

The CP Operation Rules set forth general standards only, and each company determines the details of its CP based on considerations such as company size, and company and industry characteristics.

If the company has a competition compliance programme in place, does it have any effect on sanctions?

Previously, the KFTC reduced the administrative surcharge of companies being investigated and found to be in violation of competition law if they had adopted a CP and received a qualifying rating in an evaluation by the KFTC. Under the recently amended CP Operation Rules, this particular incentive is no longer available, but others such as an adjustment in the scope of the company’s obligation to publicly disclose its violation (eg, in terms of number of newspapers where the violation must be announced) and exemption from KFTC investigations initiated ex officio remain available.

Implementing a competition compliance programme

Commitment to competition compliance

How does the company demonstrate its commitment to competition compliance?

Adopting and vigorously enforcing a CP is a key means of demonstrating commitment to competition compliance. Whereas companies previously regarded a CP primarily as a feature that would bolster their defence in a KFTC investigation or make them eligible for various incentives, there is now growing recognition that a CP can be an effective means of managing risk and boosting a company’s competitiveness. According to the KFTC, as of September 2017, there were 660 companies that had adopted a CP, and 18 companies applied to the KFTC to rate their CP between January and September 2017.

Risk identification

What are the key features of a compliance programme regarding risk identification?

As discussed, the terms and features of a CP are determined by the company at its discretion. However, to be recognised as a CP by the KFTC, the programme must contain the following features:

  • a declaration of commitment to compliance by the representative of the company (eg, CEO);
  • the appointment of a compliance officer;
  • the preparation and dissemination of compliance manual;
  • continuous and systematic compliance training;
  • the implementation of internal monitoring system;
  • disciplinary measures against violators; and
  • an appropriate system for management of documents.

Risk-assessment

What are the key features of a compliance programme regarding risk assessment?

The Korea Fair Trade Mediation Agency (KOFAIR), which is subordinate to the KFTC and is responsible for operating the CP rating programme, has published a checklist of criteria it references when evaluating CPs.

The checklist requires companies to continuously monitor to check for potential violations of law and to put in place a system whereby potential violations can be quickly escalated to the compliance officer and senior management. Moreover, companies are recommended to prepare a risk assessment report that stipulates matters such as the frequency of the risk assessment, the institution that conducted the risk assessment, the departments that were evaluated, the content and results of the assessment and follow-up measures.

Risk-mitigation

What are the key features of a compliance programme regarding risk mitigation?

The above checklist provides that companies should take measures to mitigate any identified risk, impose disciplinary measures against violators and implement an incentive system to encourage adherence to compliance policies.

Compliance programme review

What are the key features of a compliance programme regarding review?

The KOFAIR’s checklist is designed to allow companies to regularly evaluate the CP and make improvements. It recommends that companies prepare a training results report that describes and analyses the effects of the compliance training and employees’ level of understanding regarding compliance issues.

Dealings with competitors

Arrangements to avoid

What types of arrangements should the company avoid entering into with its competitors?

The Monopoly Regulation and Fair Trade Law (FTL) prohibits agreements from engaging in the following, where such arrangement would have an anticompetitive effect:

  • fixing, maintaining or altering prices;
  • determining the terms and conditions for trade in goods or services or for payment of fees;
  • restricting the production, shipment of transportation or trade in goods or services;
  • restricting the territory of trade or customers;
  • hindering or restricting the installation or expansion of facilities or procurement of equipment necessary for manufacturing or provision of services;
  • restricting the types or specifications of the goods at the time of production or trade;
  • establishing a corporation or the like to jointly conduct or manage important parts of businesses;
  • determining a successful bidder, bidding price, contracting price or certain other factors in an auction; or
  • hindering or restricting the business activities or the nature of the business of other enterprises, thereby substantially restraining competition in a relevant area of trade.

Not all these arrangements are prohibited per se, and usually, the anticompetitive impact is weighed against efficiencies. However, a ‘hard-core’ cartel such as market allocation and quantity restriction may be deemed unlawful without an assessment of anticompetitive effect, absent special circumstances.

Suggested precautions

What precautions can be taken to manage competition law risk when the company enters into an arrangement with a competitor?

The company should generally avoid including the arrangements described in question 10 in the agreement with the competitor. Since implicit as well as explicit agreements are regulated and an agreement may be inferred through coordinated conduct, the company should ensure that there is no ‘side agreement’ through which an understanding is reached to engage in prohibited activity, such as market allocation or restrictions on launching a competing product. The company should also take care to restrict the flow of sensitive information (eg, on price or output volume) to and from the competitor.

Cartels

Cartel behaviour

What form must behaviour take to constitute a cartel?

The agreement need not be written, and even an implicit agreement may constitute a cartel. The agreement may be inferred from concerted action, where two or more companies engage in the conduct described under question 10, and relevant circumstances such as the nature of the relevant product or service, economic incentives and effects, and the frequency and form of communication between the companies makes it likely that the companies were acting in concert.

Since the FTL prohibits the agreement itself as a cartel, companies may (and routinely are) be punished for engaging in cartel even if they were not successful in carrying out the relevant agreement. The requisite agreement may be deemed formed even if one party did not intend to actually engage in the relevant action, as long as the other party acted in reliance of the agreement being implemented. However, unilateral conduct where there was no meeting of the minds with a counterparty would not constitute a cartel.

Avoiding sanctions

Under what circumstances can cartels be exempted from sanctions?

An agreement among competitors who collectively have a market share of 20 per cent or less is deemed not to have an anticompetitive effect, and the relevant companies will be exempted from sanctions. In addition, even though the KFTC in 2009 published a guideline on cartel review process under which companies may request the KFTC to review legality of contemplated coordination or collaboration involving two or more companies, this system has not been actively utilised.

Exchanging information

Can the company exchange information with its competitors?

In a series of recent cases, the Supreme Court in Korea took the position that information exchange, on its own, does not constitute unlawful collusion, and that there must be additional factors, such as evidence showing a ‘meeting of the minds’. For example, in 2015, the Supreme Court overturned the lower court’s finding of a price-fixing agreement in the instant noodle industry, despite evidence of price-related information exchange and parallel pricing, as well as the active cooperation of a leniency applicant (Supreme Court decision dated 24 December 2015, Case No. 2013Du25924). This and similar decisions have limited the evidentiary value of information exchange in establishing the existence of a price-fixing agreement.

Notwithstanding the above, the KFTC has traditionally viewed information exchange coupled with parallel conduct as giving rise to a prima facie inference of a cartel, and even the Supreme Court has maintained that information exchange may constitute strong evidence of a meeting of the minds. As such, it is prudent for companies to restrict information exchange with competitors to the extent strictly necessary.

Information considered sensitive generally includes any information that may impact the competitor’s pricing or marketing policies, including information on price, sales margin, cost, discounts and rebates, transaction terms, product launch schedule, production capacity, and inventory.

Leniency

Cartel leniency programmes

Is a leniency programme available to companies or individuals who participate in a cartel in your jurisdiction?

A leniency programme is available for cartel participants. The programme does not extend to other forms of prohibited conduct.

A successful leniency applicant must meet certain conditions, and the level of leniency granted will depend on whether and the degree to which such conditions are met. The general parameters are as follows:

  • priority in reporting: The level of leniency the applicant qualifies for depends on whether the applicant is the first to report ‘exclusive’ information to the KFTC;
  • timing: The applicant’s eligibility for and level of leniency will also depend on:
  • whether the KFTC had already commenced investigating the matter prior to the applicant’s provision of information; and
  • whether the applicant is the first, second or further down in line;
  • degree of cooperation: The degree and duration of the applicant’s cooperation with the KFTC’s investigation will be considered; and
  • continued involvement in cartel: The KFTC will also take into account whether the applicant has ceased to participate in the cartel.

Subject to the satisfaction of all of the relevant requirements, an applicant (including its employees) who first reported the relevant conduct prior to the KFTC’s commencing its investigation of the matter will receive full leniency from all applicable administrative sanctions. A second-in-line applicant who meets the leniency criteria receives a 50 per cent reduction in its administrative fine. Companies that qualify for leniency are exempted from criminal referral.

Ringleaders are also eligible for leniency, provided that leniency is not available for companies that repeatedly engaged in a cartel, coerced others to participate in a cartel or stopped others from ceasing to participate in a cartel.

The name of the applicant is kept confidential and the KFTC must take measures to retain confidentiality, such as, using an alias for the applicant in all examination reports and decisions and redacting parts that contain identifying information.

Can the company apply for leniency for itself and its individual officers and employees?

Leniency, if granted, extends to individual officers and employees.

Can the company reserve a place in line before a formal leniency application is ready?

In cases where it would take a considerable period of time to compile all of the relevant information or to submit substantiating documents together with the leniency application, the applicant may first submit only basic information regarding itself (its name, representative, address, etc) and an overview of the relevant conduct. The applicant must state the period (maximum 15 days) it needs in order to compile and submit the outstanding information, including exhibits, and this supplementation period may be extended by a further 60 days for cause, at the KFTC’s discretion.

Whistleblowing

If the company blows the whistle on other cartels, can it get any benefit?

The FTL provides for ‘amnesty plus’, under which an applicant who was subject to an ongoing investigation regarding an alleged cartel (first cartel) can seek amnesty or full leniency with respect to another cartel (second cartel) that was not the subject of the KFTC’s initial investigation. In this case, the applicant for amnesty plus may be partially exempt from the corrective order and fully or partially exempt from the surcharge with respect to the first cartel, depending on the relative importance of the first cartel and second cartel, and fully exempt from administrative sanctions for the second cartel.

Dealing with commercial partners (suppliers and customers)

Vertical agreements

What types of vertical arrangements between the company and its suppliers or customers are subject to competition enforcement?

Vertical arrangements are regulated under the FTL as one form of unfair trade practices or abuse of market dominance (see question 23), and those subject to competition enforcement include resale price maintenance (RPM), exclusive dealing, tying, and restrictions on sales territory or counterparty.

Two statutes - the recently enacted Fairness in Distribution Transactions Act (Distributor Act) (effective 23 December 2016) and the Fairness in Franchise Transactions Act (Franchise Act) - afford protections to certain purchasers in a B2B transaction that are regarded as having a weaker negotiating position. The Distributor Act and the Franchise Act elaborate on the unfair trade practices prohibited in business transactions with distributors and with franchisees, respectively.

There are also statutes that protect vulnerable suppliers. These are the Fair Transactions in Large-Scale Retailing Business Act (Large-Scale Retailers Act), which prohibits abusive conduct by ‘large-scale retailers’ as regards suppliers and lessees, and the Fairness in Subcontracting Transactions Act (Subcontracting Act), which applies when the provision of goods or services is outsourced to a small- or medium-sized enterprise (SME) by a non-SME or a larger SME (in terms of turnover or assets).

Would the regulatory authority consider the above vertical arrangements per se illegal? If not, how do they analyse and decide on these arrangements?

Maximum RPM and minimum RPM are subject to different review standards. A minimum RPM is deemed unlawful as a general rule, unless it is justifiable due to reasons such as its promoting inter-brand competition and increasing consumer welfare. Maximum RPM is only unlawful if it has an anticompetitive effect (eg, if setting the maximum price is likely to lead to a cartel), and even if there is a potential anticompetitive effect, the maximum RPM may be justified if such anticompetitive effect is outweighed by efficiencies.

The other types of vertical arrangements are subject to the rule of reason.

Under what circumstances can vertical arrangements be exempted from sanctions?

For exclusive dealing and restrictions on sales territory or counterparty, the company will not be subject to sanctions if it has less than 10 per cent market share (or if the market share is difficult to calculate, annual sales of less than 2 billion won).

There are no safe harbours for RPM or tying.

 

How to behave as a market dominant player

Determining dominant market position

Which factors does your jurisdiction apply to determine if the company holds a dominant market position?

A dominant market position is presumed if a company has a market share of 50 per cent or more, or has, combined with one or two other companies, a market share of 75 per cent or more, where each of the relevant companies has a market share of at least 10 per cent. Once the presumption is triggered, the burden shifts to the respondent to demonstrate that it does not possess market dominance.

Other factors that the KFTC will consider in determining dominance include: barriers to entry; the relative size and strength of competitors; the possibility of coordination between competitors; the existence of similar products or adjacent markets; ability to foreclose the market; and financial power.

Abuse of dominance

If the company holds a dominant market position, what forms of behaviour constitute abuse of market dominance? Describe any recent cases.

Companies with a dominant market position may not engage in: unfairly setting, maintaining or changing the product or service’s price, unfairly controlling the sale of products or the rendering of services, unfairly interfering with the business activities of another company, or unfairly excluding competitors or harming consumers’ interest.

The FTL’s provisions on abuse of market dominance largely overlap with a separate set of prohibitions on unfair trade practices. The latter does not require a finding of market dominance, and the KFTC has traditionally relied on the unfair trade practices provision more frequently than the abuse of market dominance provision. In recent years, however, the KFTC has increasingly begun applying the abuse of market dominance provision (which carries a heavier sanction) in tandem with the unfair trade practice provision, most prominently in the IT sector where the proliferation of standard-essential patents is perceived as increasing the risk of abuse. For example, this year the KFTC imposed on Qualcomm a fine of 130 million won (the largest ever imposed by the KFTC in a single case), in connection with certain licensing practices that the KFTC alleged were in breach of the company’s FRAND commitments.

Under what circumstances can abusing market dominance be exempted from sanctions or excluded from enforcement?

As discussed, a company with less than 10 per cent market share is not subject to the presumption of market dominance, and would generally not be subject to sanctions for an abuse of market dominance. Such a company may be potentially found to have engaged in an unfair trade practice, however.

Competition compliance in mergers and acquisitions

Competition authority approval

Does the company need to obtain approval from the competition authority for mergers and acquisitions? Is it mandatory or voluntary to obtain approval before completion?

The following arrangements must be approved by the KFTC: acquisition of 20 per cent or more shares or equity interest with voting rights or acquisition of additional shares or equity interest in voting right to become the largest shareholder, interlocking directorships, mergers, acquisition of all of important part of business or business assets, and establishment of a newly incorporated joint venture.

The transaction must meet the following ‘size-of-the-parties’ test in order for the filing obligation to be triggered: one party (including affiliates that will continue to be affiliates after the transaction) has assets or turnover equal to or greater than 300 billion won, and the other party (including affiliates that continue to be affiliates after the transaction) has assets or turnover equal to or greater than 30 billion won. In addition, for an overseas transaction where both parties are foreign companies, both parties (including their respective affiliates that will continue to be affiliates after the transaction) must have a Korean turnover of equal to or greater than 30 billion won.

Assuming the above thresholds are met, pre-closing clearance is required in most cases if either of the parties (including affiliates that will remain as such after the transaction) has global assets or annual turnover of equal to or greater than 2 trillion won.

The party with the obligation to file is the acquirer, in the case of an acquisition of shares or equity interest with voting rights or an acquisition of business or business assets. For mergers, the surviving company or the company being newly established by the merger has the filing obligation. For interlocking directorships, the company appointing its employee, officer or director in an unaffiliated company is responsible for the merger filing. For joint ventures (JVs), the largest shareholder subscribing to the shares of the JV is responsible for the merger filing.

How long does it normally take to obtain approval?

The statutory processing period for a filing is 30 calendar days, but such 30-day period may be extended by an additional 90 days at the sole discretion of the KFTC. Also, the review period will be automatically tolled upon the KFTC’s issuing a request for additional information, until the requested information is submitted to the KFTC. In the case of a simplified review, the KFTC normally completes its review within 15 calendar days.

If the company obtains approval, does it mean the authority has confirmed the terms in the documents will be considered compliant with competition law?

Clearance by the KFTC does not automatically mean that all terms in the submitted documents have been cleared. To the extent any restrictive provisions are later brought to the KFTC’s attention, the KFTC can revisit the matter without being bound by its clearance decision.

Failure to file

What are the consequences for failure to file, delay in filing and incomplete filing? Have there been any recent cases?

The maximum administrative fine for failure to file is 100 million won. When the KFTC becomes aware of non-compliance of the merger filing requirements, it would require the relevant transaction to be notified and impose an administrative fine for a late filing when the filing is submitted. In determining the administrative fine, the actual amount in each case is determined by a number of factors, including the number of days delayed and the size of the party that had the obligation to file.

The KFTC no longer publishes individual penalty amounts for failure to file since 2009; however, based on the most recent available statistics up to early 2009, the largest fine amount imposed for failure to file is 30 million won. For 2017, there were 668 transactions filed, and 28 cases of failure to file.

Investigation and settlement

Legal representation

Under which circumstances would the company and its officers or employees need separate legal representation? Do the authorities require separate legal representation during certain types of investigations?

There is no set rule regarding the types of situations where separate legal representation is required. Generally, separate legal representation is advisable where the company’s interests diverge from that of its officers and employees - for example, if an employee is alleging that they engaged in improper conduct in accordance with management instructions but the company believes that the act was performed at the working level without authorisation.

Dawn raids

For what types of infringement would the regulatory authority launch a dawn raid? Are there any specific procedural rules for dawn raids?

The KFTC may conduct a dawn raid with respect to any suspected violation of the FTL. Dawn raids are a frequently used method of investigation by the KFTC. The KFTC’s Rules on KFTC Investigation Procedures set forth certain procedural requirements, such as to: confine investigation to minimum scope necessary; present a written mandate for the dawn raid; only search premises stipulated in the written mandate; refrain from overbearing or humiliating words or conduct; review and copy documents only with cooperation from or at the presence of the relevant company employee, provided that seizing an electronic medium for imaging purposes is permitted in certain circumstances; allow legal counsel to be present during the entire investigation process; and provide the company with a written report regarding the investigation results.

What are the company’s rights and obligations during a dawn raid?

Unlike the prosecutors’ dawn raids based on a court-issued warrant, the KFTC’s investigations, including dawn raids, are based on voluntary cooperation of those subject to the investigations. In practice, however, due to the penalties that can be imposed on the companies for failure to comply with the KFTC’s requests, the companies tend not to rely on the voluntary nature of the cooperation in handling the KFTC’s dawn raids.

In the dawn raid context, criminal sanctions (imprisonment of up to two years or criminal fine of up to 150 million won) can be imposed for hiding, destroying, modifying or denying access to documents. In addition, companies that fail to comply with the KFTC’s document production order may be subject to not only an ‘enforcement levy’ (a charge to induce compliance) of up to 0.3 per cent of the company’s average daily revenue, for each day of delay, but also criminal sanctions (imprisonment of up to two years or criminal fine of up to 150 million won).

Settlement mechanisms

Is there any mechanism to settle, or to make commitments to regulators, during an investigation?

The FTL provides for a process whereby companies under investigation by the KFTC may settle or resolve the investigation through a ‘consent resolution.’ Under this procedure, which does not apply to cartel investigations, the applicant agrees to certain enumerated conditions in order to voluntarily resolve the matter, and the consent resolution will not be treated as an admission of violation. The KFTC has discretion to decide whether to accept or reject an application for a consent resolution. Since the consent resolution system was introduced in 2012, there have only been a handful of cases where a consent resolution was applied for and approved.

The application for the consent resolution must be filed with the KFTC before the last hearing for the matter. The KFTC must decide whether to commence the consent resolution process within 14 days of receiving the application. If it decides to proceed with this procedure, the consent resolution will be prepared and finalised based on discussion among and input from the company, the KFTC, other interested parties and government agencies and the prosecutors.

What weight will the authorities place on companies implementing or amending a compliance programme in settlement negotiations?

The fact of whether companies have an existing CP or are implementing or amending a CP is not indicated as a factor considered during the consent resolution process. The consent resolution system is fairly new and there has been insufficient opportunity to observe what weight the authorities would place on the implementation or amending of a CP in connection with consent resolution discussions.

Corporate monitorships

Are corporate monitorships used in your jurisdiction?

There is no corporate monitorship system in Korea. In cases of remedies issued by the KFTC, for the purpose of monitoring the compliance, the KFTC often requires the companies subject to remedies to make periodic compliance reports to the KFTC over a certain period.

Statements of facts

Are agreed statements of facts in a settlement with the authorities automatically admissible as evidence in actions for private damages, including class actions or representative claims?

No statement of facts submitted to the KFTC during the consent resolution process would be automatically admissible as evidence in private damages actions that may follow. That said, it would be possible for the plaintiff in such private damages action may gather publicly available information and materials on the consent resolution and submit them to the court, at which point the court would need to determine the admissibility of those materials. In addition, the court could potentially order the production of such materials if deemed essential for the action, although there has been no precedent on this point due to the short history of the consent resolution system in Korea.

Further on publication of information during the consent resolution process, a proposed draft of consent resolution is made available to the public for interest parties’ comments, either by publishing the draft in the government’s Official Gazette or by posting it in the KFTC’s website. Further, once the consent resolution is finalised, it is published on the KFTC’s website. Before the public disclosure described above, the companies involved are allowed to request for confidential treatment of sensitive information in the public documents.

Invoking legal privilege

Can the company or an individual invoke legal privilege or privilege against self-incrimination in an investigation?

Although the KFTC examiners cannot by law compel employees to answer questions or to submit documents or other materials, under the FTL, any unjustified refusal to cooperate with such requests may subject the company and its employees to imprisonment of up to two years or a criminal fine of up to 150 million won (see question 31).

Attorney-client privilege is not recognised in the context of agency investigations, and thus even communications with legal counsel may be seized if they are present onsite at the client’s company.

Confidentiality protection

What confidentiality protection is afforded to the company or individual involved in competition investigations?

KFTC officials are under obligation to keep the information of companies that they have received during the course of their official duty confidential and not to use such information for purposes other than enforcement of the FTL, and KFTC investigations are generally kept confidential while the investigation is in progress. In some cases where the KFTC deems appropriate, however, it may issue a press release that includes certain details of the case investigated.

The general rule is that the KFTC’s deliberations and final decision must be disclosed to the public (the written decision the KFTC issues at the conclusion of the investigation is made public through its website), but the KFTC may opt to make these confidential if necessary to protect the trade secrets of the relevant company or trade association. The KFTC’s practice has been to issue written decisions only when a violation of the FTL is found, but under the recent amendment of the FTL mentioned above, the KFTC will be required by law to publish written decisions even in cases where the KFTC does not find a violation.

Refusal to cooperate

What are the penalties for refusing to cooperate with the authorities in an investigation?

See question 36.

Infringement notification

Is there a duty to notify the regulator of competition infringements?

There is no duty to proactively notify the regulators of competition infringements.

Limitation period

What are the limitation periods for competition infringements?

The limitation period is seven years from the date the violation ended. If the KFTC commences its investigation before the expiration of the seven-year period, the limitation period is the longer of seven years from the date the violation ended and five years from the date of the commencement of the investigation.

Miscellaneous

Other practices

Are there any other regulated anticompetitive practices not mentioned above? Provide details.

The FTL regulates exploitative as well as exclusionary behaviour. In this vein, it prohibits such conduct as discriminatory treatment and coercing the counterparty to accept unfair transactional conditions as an unfair trade practice. The improper solicitation of customers is also prohibited.

Future reform

Are there any proposals for competition law reform in your jurisdiction? If yes, what effects will it have on the company’s compliance?

On 29 December 2017, the National Assembly approved a bill to amend the Distributor Act, the Franchise Act and the Subcontracting Act. The amendments, which will go into effect on 17 July 2018, reflect the current administration’s focus on eradicating abusive and exploitative conduct by parties with greater economic power. The key changes are as follows:

  • Distributor Act:
  • adopts rewards system for reporting violations.
  • Franchise Act:
  • prohibits franchisors from unilaterally changing the franchisee’s business area;
  • prohibits franchisors from taking retaliatory action and makes treble damages available for retaliation;
  • adopts a rewards system for reporting violations;
  • Subcontracting Act:
  • expands scope of protected technical data;
  • expands bases for demanding adjustment of fees;
  • expands types of conduct protected from retaliation and makes treble damages available for retaliation.

The new rewards systems and the prohibitions on and treble damages for retaliatory action are expected to lead to an increase in whistle -blowing regarding violations.

Updates and trends

Updates and trends

Updates and trends

In March 2018, the KFTC launched the Special Committee to Improve Fair Trade Laws and Systems (the Special Committee) to review the FTL and attendant regulations and recommend improvements. The study was occasioned by a perception that the current FTL inadequately reflects changed economic and market conditions (the statute was first enacted in 1980) and that the dozens of piecemeal amendments of the statute over the years have resulted in internal incongruities.

The Special Committee has 23 members, most of whom are independent experts, and consists of the following three subcommittees:

 

Competition subcommittee

Conglomerate subcommittee

Procedural subcommittee

Review area

• Abuse of dominance regulations

• Unfair trade practice regulations

• Leniency system and pre-approval for concerted action

• Penal provisions and exclusive criminal referral system

• Effectiveness of market structure investigation and system for reforming anticompetitive regulations

• Modernisation of competition laws to meet challenges of fourth industrial regulation.

• Conglomerate designation regulations

• Holding company regulations

• Regulations on investment (eg, on circular investment)

• Public disclosure requirements

• Regulations on fraud and unfair support of affiliates.

• Codification of procedural rules and protecting due process rights

• Increasing speed/efficiency of investigations

• Increasing use and effectiveness of consent resolution

• Increasing KFTC’s structural independence

• Systemic reforms to increase confidence in KFTC enforcement practice.

[All subcommittees] Structural changes to laws and regulations

The Special Committee is scheduled to complete its review by July 2018 and the KFTC will take its findings and recommendations into account in preparing a government bill to amend the FTL.