Korea: Fair Trade Commission
Korea: from the enforcer
Sung Wook Joh
Director General, Planning and Coordination Bureau
Director General, Competition Policy Bureau
Director General, Market Structure Policy Bureau
Director General, Consumer Policy Bureau
Peter JK Kim
Director General, Anti-monopoly Bureau
Director General, Cartel Investigation Bureau
Director General, Business Group Bureau
Director General, Business Trade Policy Bureau
Director General, Distribution Policy Bureau
Director General, Spokesperson
Questions and answers
How long is the head of agency’s term of office?
The chairperson and vice chairperson of the Korea Fair Trade Commission (KFTC) have three-year terms for their positions and can serve a consecutive term once.
When is he or she due for reappointment?
On 8 September 2022.
Which posts within the organisation are political appointments?
The chairperson and vice chairperson
What is the agency’s annual budget?
As of 2020, 138 billion won.
How many staff are employed by the agency?
As of 2020, 555 (number of staff at the authority work on competition enforcement.
To whom does the head of the agency report?
The KFTC is an independent agency; its chairperson does not report to any other government agency.
Do any industry-specific regulators have competition powers?
Only the Korea Fair Trade Commission has the right to enforce the Monopoly Regulation and Fair Trade Act. However, there are industry-specific regulators who implement rules for their own purposes.
If so, how do these relate to your agency’s role?
Regulatory authorities impose ex ante regulations on market entry, market share and the use of essential facilities after considering the relevant policies on the industries, and the KFTC enforces ex post regulations on violations of competition law such as cartels, market dominance abuses and unfair trade behaviours. The KFTC also engages in ex ante regulations by giving opinions to other regulatory authorities and by conducting competition assessment of anticompetitive regulations.
May politicians overrule or disregard authority’s decisions? If they have ever exercised this right, describe the most recent example.
No, the decisions made by the KFTC work as the first trial. No politician can dismiss or disregard KFTC decisions. Only the court can review the decisions.
Does the law allow non-competition aims to be considered when your agency takes decisions?
No, we follow competition purposes only.
Which body hears appeals against the agency’s decisions? Is there any form of judicial review beyond that mentioned above? If so, which body conducts this? Has any competition decision by the agency been overturned?
The KFTC or the Seoul High Court. Anybody who tries to appeal against a decision of the KFTC can submit to the KFTC a formal objection with explanation within 30 days after the receipt of the decision notification. Or he/she can directly appeal to the Seoul High Court.
There were cases where the KFTC’s competition decisions have been overturned.
Has the authority ever blocked a proposed merger? If yes, please provide the most recent instances.
Between 1981 and 2020, nine proposed mergers were blocked by the KFTC. The most recent case the KFTC decided to block is the proposed acquisition of CJ Hellovision by SK Telecom (broadcasting and telecom sector, 2016).
Has the authority ever imposed conditions on a proposed merger? If yes, please provide the most recent instances.
Between 1981 and 2020, 80 proposed merger cases were cleared with remedies, of which one case was cleared in 2020 with remedies. Most recently, the KFTC imposed remedies on the merger between Borealis AG and DYM Solution Co Ltd in May 2020 (materials of power cable sector).
Has the authority conducted a Phase II investigation in any of its merger filings? If yes, please provide the most recent instances.
Yes. The most recent case, involving an in-depth investigation (equivalent to a Phase II investigation) is the proposed merger between Delivery Hero SE and Woowa Brothers Corp (food-delivery app sector, 2020).
Has the authority ever pursued a company based outside your jurisdiction for a cartel offence? If yes, please provide the most recent instances.
Starting with the sanctions imposed on the graphite electrode cartel in April 2002, the KFTC has continued to uncover and correct the international cartel if it affects domestic market although it may have been conducted outside our jurisdiction.
Recently, the KFTC imposed a corrective order and a penalty surcharge of 1.32 billion won on four foreign banks for rigging currency swap bids conducted by three local companies.
Do you operate an immunity and leniency programme? Whom should potential applicants contact? What discounts are available to companies that cooperate with cartel investigations?
Yes. The basic purpose of the leniency programme is to push companies to come forward faster than any other companies. Therefore, it is critical to accurately check the timing and order of leniency applications. The KFTC, in this sense, receives applications via a specifically designated email address or fax in a designated place. Those who wish to apply should contact: Cartel Policy Division of the KFTC by post, by fax on +82 44 200 4444 or by email at [email protected].
Remedies and surcharge can either be mitigated or exempted for leniency applicants, and referral for prosecution can be exempted (article 44 of the Monopoly Regulation and Fair Trade Act (MRFTA)).
Is there a criminal enforcement track? If so, who is responsible for it? Does the authority conduct criminal investigations and prosecutions for cartel activity? If not, is there another authority in the country that does?
In case of violation of some part of the MRFTA, if the extent of violations is grave and apparent, the KFTC has an obligation to refer to the prosecution.
In principle, criminal punishments for all anticompetitive conducts are available. Major violating activities including abuse of market dominance and cartels, among others, are subject to up to three years of imprisonment pursuant to article 124 of the MRFTA; and unfair trade practices are subject to up to two years of imprisonment pursuant to article 125.
When the KFTC refers the case to the Public Prosecutor General, the criminal investigation and prosecution afterwards are conducted not by the KFTC but by Public Prosecutor’s Office, which has the right to prosecute.
Are there any plans to reform the competition law?
Since 2017, the KFTC has operated a private–public task force composed of experts from various fields to draft the revision and made an effort to persuade the National Assembly. The complete revision of the MRFTA, which aims to modernise the competition law to respond to environmental changes, includes merger notification based on the transaction value thresholds, reinforcement of cartel regulation on information exchange, swift damage relief for victims of unfair transactions and enhanced procedural rights of defence for respondents. The revised MRFTA is expected to be effective at the end of December 2021, after the improvement of its subordinate statutes. It is also expected to serve as the basis for strengthening the competitiveness of the Korean economy by implementing a fair and innovative economic system.
When did the last review of the law occur?
The KFTC proposed a comprehensive amendment to the MRFTA, reflecting on the changes in economic conditions, and for the first time since 1981, the MRFTA was completely revised.
First, the KFTC strengthened its deterrence against violations of law by increasing the upper limit of an administrative fine twofold and adopting injunctive relief as well as order for submission of documents for claims for compensation of damage. Also, the KFTC improved the enforcement of MRFTA in administrative, civil and criminal cases by removing punishments for mergers with low anticompetitive risks and certain unfair trade practices.
Second, the KFTC expanded the scope of monitoring against unfair intra-group transactions to encourage large business groups to develop a sound governance structure and practices. The KFTC also put a limit on the voting rights of public interest corporations in order to prevent expansion of market dominance through unlawful means.
Third, to enhance the legitimacy and transparency of procedures regarding investigation and deliberation, the KFTC strengthened the defence rights for respondents by expanding their access to evidence and clarifying the fixed date for limitation period of KFTC’s disposition.
Lastly, the KFTC adopted the merger notification guidelines based on the transaction value for effective law enforcement in new industries and complemented the existing provisions on presumption and practices prohibited under the MRFTA. It also adopted the rule of reason that exceptionally allows the practices of resale price management conducted on reasonable grounds.
In addition, the KFTC enacted ‘Guidelines for Access to Evidence’, which allow limited access to evidence related to trade secrets, to expand the respondents’ access to evidence data and ensure their defence rights.
The revised act will enter into effect in December 2021.
Do you have a separate economics team? If so, please give details.
Yes. Since its reorganisation in December 2005, the KFTC has operated an Economic Analysis Division, which manages specialised duties such as market analysis in the area of mergers and acquisitions, and quantitative analysis on anticompetitive market dominance abuse or cartel.
Has the authority conducted a dawn raid?
Yes. The KFTC is conducting dawn raids against antitrust cases pursuant to article 81 of the MRFTA.
Has the authority imposed penalties on officers or directors of companies for offences committed by the company? If yes, please provide the most recent instances.
As prescribed by law, the KFTC can refer an individual to the prosecution for the illegal conduct of that person when he or she is engaged in the violation of an entity.
What are the pre-merger notification thresholds, if any, for the buyer and seller involved in a merger?
Pre-merger notification is required if total assets or turnover of either one or the other party to a merger deal stand at over 2 trillion won. The value of total assets or turnover is estimated by adding the aggregate assets or turnover of the companies that remain as an affiliate of the party before and after the completion of the deal. However, in the case of business transfer, the thresholds are total assets or turnover of the only transferred company instead of the entire corporate group that includes the company.
Are there any restrictions on investments that involve less than a majority stake in the business?
A merger transaction that involves acquisition of more than 20 per cent of shares in the acquired company by the acquiring company, regardless of acquiring a majority stake, can be subject to notification requirement depending on the size of the merging parties. However, a purchase of shares that does not lead to formation of controlling relationship is subject to simplified merger review as the transaction is presumed not to be anticompetitive.
Korea: from the enforcer's competition economists
Address: 95 Dasom3-ro Sejong city, Korea, 30108
Tel: +82 44 200 4326
Fax: +82 44 200 4343
Deputy Director of Economic Analysis Division
Tel: +82 44 200 4376
Email: [email protected]
Questions and answers
How many economists do you employ?
There are 72 economists in the Korea Fair Trade Commission.
Do you have a separate economics unit?
Yes, we have the Economic Analysis Division.
Do you have a chief economist?
We have opened the recruitment for the post of the chief economist, who is also the director of the Economic Analysis Division.
To whom does the chief economist report?
The chief economist reports to the director general for Market Structure Policy.
Does the chief economist have the power to hire his or her own staff?
How many of your economists have a PhD in industrial economics?
There are nine.
Does the agency include a specialist economist on every case team? If not, why not?
No, not on every case team. Economists are involved in selective cases that are influential, complicated or under rule-of-reason.
Is the economics unit a ‘second pair of eyes’ during cases – is it one of the agency’s checks and balances? If not, why not?
The Economic Analysis Division focuses more on providing economic evidence in case handlers until now. Sometimes economic evidence plays a key role in dropping cases during the investigation phase.
How much economics work is outsourced? What type of work is outsourced?
Sometimes the work is outsourced. There are no specific criteria for outsourcing.