South Korea: Overview

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In summary

This chapter explains new regulations under the amended Korean Fair Trade Law and the recent developments in South Korea.

Discussion points

  • Key changes under the Amended Korean Fair Trade Law and its implications;
  • prosecutors actively pursue investigations in criminal cartel cases; and
  • possible increase in punitive damages and adoption of class actions.

Referenced in this article

  • The amended Anti-Monopoly Regulation and Fair Trade Act;
  • Korean Prosecutor’s Guidelines on Leniency Programme and Investigation Procedures for Cartel Conduct;
  • the Korean Fair Trade Commission’s (KFTC) leniency programme; and
  • the amended Commercial Code.

Korean National Assembly passes sweeping amendments to the Monopoly Regulation and Fair Trade Act

On 9 December 2020, the National Assembly of Korea passed the bill submitted by the KFTC in August 2020 to substantially amend the Monopoly Regulation and Fair Trade Act (MRFTA), South Korea’s primary competition law. [1] The MRFTA as amended (the Amended MRFTA) will come into effect on 29 December 2021 and introduce a number of new enforcement measures and increased sanctions to significantly strengthen antitrust enforcement in South Korea, as well as to increase the number of related civil disputes. Therefore, companies engaging in businesses in South Korea are advised to closely monitor the developments and strengthen their antitrust compliance as necessary.

Below is a summary of the key changes under the Amended MRFTA that may impact foreign companies and their affiliates in South Korea.

Information exchange constituting cartel conduct and giving rise to presumption of agreement

Under the MRFTA, an agreement to exchange information among competitors alone does not constitute cartel conduct. Similarly, the Supreme Court of Korea has repeatedly ruled that mere information exchange is not sufficient to establish agreement, which is an element of proof in cartel conduct. In light of Supreme Court cases, the KFTC has previously recognised an implicit cartel conduct only if there were other factors such as circumstances showing identical or similar changes in pricing in addition to the exchange of price information.

With the addition of two new provisions, however, the Amended MRFTA will make it considerably easier for the KFTC to establish the existence of an agreement, and therefore a cartel, from information exchange among competitors.

First, under the Amended MRFTA, an agreement to exchange information such as price or output among competitors is expressly defined as a type of cartel conduct that substantially restrains competition. Thus, a finding of an agreement among competitors to exchange information on price or output will now be sufficient to establish cartel conduct even in the absence of an agreement to fix prices or restrict outputs. That said, the type of exchanged information would still have an impact on the KFTC finding that cartel behaviour occurred. If the information exchanged was of a kind that is confidential and can possibly affect competition (such as price increase information), the exchange of information alone may establish cartel conduct, since such confidential information is highly likely to restrain competition. However, an exchange of public information such as statistics or past price information that had already been disclosed would be less likely to establish cartel conduct. During 2021, the KFTC is also expected to amend the Enforcement Decrees of the MRFTA to specify both the scope and details of the information exchanged among competitors.

Second, under the Amended MRFTA, an exchange of any information that is necessary to fix prices, restrict outputs, allocate markets or rig bids will give rise to presumption of the existence of a collusive agreement. This means that the KFTC will have a lower burden of proof in hardcore cartel cases as it will only need to establish exchange of information among competitors rather than an actual agreement to engage in unlawful collusion.

As illustrated by these newly added provisions, the regulation of information exchange has been strengthened under the Amended MRFTA. Accordingly, it has now become critical for companies to strictly manage the collection or provision of business information. For instance, any sharing of price information or price increase plan through fax, email or at meetings with competitors should be strictly prohibited. In addition, companies would need to closely manage all incoming and outgoing information, specify the background and sources of any lawfully obtained competitor information, and introduce an internal information management system, such as establishing a system for prior or post reports regarding meetings attended by competitors (eg, association meetings) and using the system as evidence supporting the company’s responsible management, in case of any inquiry from the authorities to be able to claim that there was no improper information exchange.

Increases in maximum administrative fines

In response to criticism that the level of administrative fines sanctioned under the MRFTA is too low to eliminate undue profits and deter unlawful conduct, the Amended MRFTA introduces increased maximum administrative fines for antitrust violations. An administrative fine for antitrust violations is calculated by multiplying the relevant turnover (calculated as the sales of relevant products sold for the duration of the violation concerned) by the applicable penalty rate; and if the relevant turnover is not calculable, a fixed-amount administrative fine is imposed instead. Under the Amended MRFTA, both the maximum penalty rates and the maximum fixed amount fines are doubled as illustrated by the following examples:

 Current MRFTAAmended MRFTA
Type of conductMaximum penalty rateMaximum fixed amount (won)Maximum penalty rateMaximum fixed amount (won)
Abuse of market dominance3%1 billion6%2 billion
Cartel10%2 billion20%4 billion
Unfair trade practice2%0.5 billion4%1 billion

While the Amended MRFTA repealed criminal liability for certain types of anticompetitive conduct [2] for which criminal punishment was not strictly necessary, these amendments to the upper limits of administrative fines are expected to increase the overall degree of administrative sanctions. Prior to actually enforcing the Amended MRFTA, the KFTC is also expected to further amend its detailed guidelines for imposing the administrative fines in accordance with the new amendments.

Right to seek injunctive relief against ongoing unfair trade practices at court

Under the previous MRFTA, there was no clear rule to claim court injunction prohibiting antitrust violations, and the only available civil remedy for an antitrust violation was filing a damage suit following the KFTC’s decision. Thus, actual or potential victims of antitrust violations were only able to rely on the KFTC’s order to cease such violations.

However, the Amended MRFTA now allows parties harmed by unfair trade practices (such as refusal to deal, imposing unfairly disadvantageous terms, forced sales targets) to directly seek injunctive relief from courts. This will permit private parties to promptly seek recourse by asserting and proving the injuries they have sustained or are likely to sustain due to an unfair trade practice without having to wait until the KFTC initiates or completes investigations and renders its decision on the case. In this regard, the court injunction is available even in the absence of a KFTC investigation or decision, and is available to both private parties actually harmed by unfair trade practices and to potential victims who are threatened to sustain damage from such unfair trade practices. In practice, parties harmed by unfair trade practices or potential victims will be able to file a complaint with the KFTC and seek injunctive relief at the court simultaneously, and the court’s decision rendered in favour of the plaintiff may affect the KFTC’s investigation and deliberation process. Furthermore, customers or counterparties may now use the injunctive relief process as a potential leveraging strategy to amend unfavourable contract terms. Accordingly, companies need to establish and operate a more concrete compliance system to proactively implement potential countermeasures and avoid risks from antitrust disputes and litigations.

Under the Amended MRFTA, courts are expected to play a more important role in enforcing the MRFTA, once injunctive relief claims become more utilised.

Document production order in civil damage lawsuits

There is no formal discovery procedure in a civil damage suit in South Korea. In addition, under Korea’s Civil Procedure Act, a person may refuse to comply with a court’s order for document production if such information constitutes trade secrets. Thus, under the current MRFTA, it generally takes considerable time, sometimes several years, for the court to make a decision on the damage caused by antitrust violations.

However, the Amended MRFTA allows plaintiffs in civil damage lawsuits involving cartel conduct or unfair trade practices to file a petition to the court seeking an order for the defendant to submit documents needed for the plaintiff to prove damages. The defendant will not be allowed to refuse to submit the documents on the ground that they constitute trade secrets if the documents are essential in proving damage or calculating the amount of damages. If the defendant refuses to comply with the order, the court may assume that what is intended to be proved by the documents is true. In this regard, it has now become easier for victims to secure evidence to prove damages from antitrust violations under the Amended MRFTA. For example, documents that contain trade secrets may be reviewed in camera if they are essential in proving or assessing the amount of damages. Accordingly, the new rule regarding document production in the Amended MRFTA is expected to both accelerate the timing of lawsuits and ease the process of calculating damages.

New transaction amount test for merger notification

The MRFTA requires merger notification if the merging parties meet certain total assets or turnover thresholds, or both. Consequently, some acquisitions of highly innovative start-up companies by large companies (killer acquisitions) remained unreported despite their substantial transaction size and their potential harm in innovative industries because the size of the target did not meet the asset or turnover thresholds.

To determine whether merger notification is required for a merger where the size of the parties does not meet the asset or turnover thresholds, the Amended MRFTA introduces a new test consisting of two prongs: whether the amount paid for the acquisition exceeds a certain amount and whether the target company has a substantial presence in South Korea. Further details of the requirements will be determined through amendment of the Enforcement Decrees of the MRFTA, but it is expected that more transactions will be subject to merger notification under the Amended MRFTA.

Strengthened due process rights [3]

Currently, the right of businesses and industry associations to have their counsel participate in and make statements at a KFTC investigation is governed by the KFTC’s administrative guidelines. Therefore, there is a possibility that the investigated company is not given proper advice from legal counsel in a timely and substantial manner during KFTC investigations. However, the Amended MRFTA now provides the statutory basis for the right to counsel, which will allow companies under investigation by KFTC to more actively enlist the assistance of legal counsel in the KFTC’s on-site investigations and proceedings. For example, the investigated company now has a formal right to officially request assistance from its counsels before starting the KFTC’s on-site investigation and its counsel’s participation in the KFTC interview of its employees.

Additions: recent developments in South Korea

The following are recent developments in South Korea’s cartel enforcement landscape, although these were not made part of the Amended MRFTA.

Prosecutors actively pursuing investigations in criminal cartel cases

The MRFTA amendment bill contained a proposal to abolish the KFTC’s exclusive criminal referral authority in hardcore cartels such as price-fixing, output restriction, market allocation and bid-rigging, but this was not signed into law. Nevertheless, even without the KFTC’s criminal referrals, the Korean Prosecution Service (KPS) retains the authority to independently investigate certain types of big-rigging cases based on other laws such as the Criminal Code (governing obstruction of bids such as bid-riggings) and the Framework Act on Construction Industry (governing bid-riggings). In addition, the Prosecutor General may officially request the KFTC to issue a criminal referral for significant hardcore cartel cases, and upon receipt of such official request, the KFTC must mandatorily issue a criminal referral. It has been the position of prosecutors that the KFTC’s administrative sanctions do not have sufficient deterrent effect and that prosecutors should actively engage in the detection and prosecution of hardcore cartel conduct even in the absence of the KFTC’s criminal referral. It is expected that prosecutors will continue to actively engage in criminal investigations and pursue prosecution of cartel conduct, including cartels committed by foreign companies.

For example, in a recent case of bid-riggings by South Korean pharmaceutical companies, prosecutors initiated an investigation based on information received from another government agency even though the KFTC had neither investigated the case nor made a criminal referral, and the Prosecutor General formally requested the KFTC to issue a criminal referral to indict the companies involved, and their executives and employees, for criminal violations of the MRFTA and bid interference. On 18 November 2020, the KPS also signed a memorandum of understanding with the US Department of Justice designed to promote cooperation in criminal enforcement of cross-border antitrust cases, including international cartel cases.

More recently, on 10 December 2020, prosecutors introduced their own Guidelines on Leniency Programme and Investigation Procedures for Cartel Conduct (the KPS Leniency Guidelines), which set forth details of the application process for ‘criminal leniency’, conditions for immunity from criminal prosecution and investigation procedures for hardcore cartel conduct. The KPS Leniency Guidelines differ from the KFTC’s leniency programme in several aspects. For example, while the KFTC’s current leniency programme is designed to grant leniency to companies involved in cartel conduct, the KPS Leniency Guidelines allow even individual applicants to be granted leniency and are therefore expected to provide greater incentives for individuals (such as whistleblowers and retired employees) to apply for leniency. [4] In addition, while the KFTC’s leniency programme grants full immunity from criminal referrals to both first-in-line and second-in-line applicants, the KPS Leniency Guidelines grant full immunity from prosecution to first-in-line applicants and 50 per cent reduction in criminal penalties to second-in-line applicants. In addition, the applicants for the KPS leniency programme can also avoid forced investigation (arrest, search and seizure, etc.) by the prosecutor.

The KPS Leniency Guidelines provide several implications. First, the KPS Leniency Guidelines encourage participants in hardcore cartels to compete in submitting leniency applications to both the KFTC and the KPS, since the KPS is now able to make an independent assessment on leniency applicants pursuant to its own guidelines, apart from the KFTC process. Second, there is now an incentive for individual participants in bid-rigging cartels to independently submit his or her own leniency application to the KPS, because the individual participants in bid-rigging cartels may be separately prosecuted for violation of the Criminal Code or the Construction Industry Act, even if the employing company is able to avoid criminal prosecution due to the KFTC’s leniency programme.

The unique features of the KPS Leniency Guidelines suggest that prosecutors will continue to actively engage in investigations of criminal hardcore cartel conduct independent from the KFTC’s enforcement efforts.

Comparison of leniency programmes of the KFTC and the KPS

Applicants subject to leniency programme1st and 2nd applicants 
Benefits of leniency programme (in criminal aspect)Immunity from criminal referral for both 1st and 2nd applicants1st applicant: non-prosecution
2nd applicant: 50% reduction in criminal penaltiesExemption from forced investigation (arrest, search and seizure, etc.) for both 1st and 2nd applicants
Individual applicantXO
Relevant conductCartel conduct in violation of the MRFTAHardcore cartel conduct in violation of the MRFTA and obstruction of bid in violation of the Criminal Code or Construction Industry Act

Possible increase in punitive damages and adoption of class actions

In September 2020, the Ministry of Justice issued a draft bill designed to expand class actions beyond securities litigation to civil damages suits with 50 victims or more. Concurrently, the Ministry of Justice issued a draft proposal for a partial amendment to the Commercial Code of Korea to apply punitive damages in all business fields and allow recovery of up to five times the actual damages suffered if the harm is caused by a business person with intention or by gross negligence. The Korean National Assembly passed the proposal for a partial amendment to the Commercial Code on 9 December 2020. This amendment to the Commercial Code will take precedence over the punitive damages provision in the MRFTA, which was adopted in 2018 to allow victims of cartel conduct to recover treble damages.

If passed into law, these changes to legislation will have far-reaching implications for hardcore cartels as large numbers of consumers will be allowed to bring class actions against cartel conduct and claim large punitive damages. Specifically, more punitive damages claims are expected to be brought against cartels following the 2018 amendment of the MRFTA, and there will likely be more cases in which courts hold defendants liable for punitive damages. Such possibilities are more likely, especially in light of other changes in the Amended MRFTA, such as the revised rule on document production order in civil damage lawsuits discussed above.


[1] For details of the proposed bill, please refer to BKL Legal Update – Antitrust 2020–10, available at

[2] Including anticompetitive mergers, refusal to deal, unfair discrimination, exclusionary conduct and resale price maintenance.

[3] In an effort to guarantee respondents’ due process rights without infringing on other legally protected rights, on 3 December 2020, the KFTC adopted new Guidelines on Access to and Copy of Documents setting forth details on the respondent’s right to inspect and reproduce evidentiary documents under the KFTC’s custody. As a general rule, all documents under the KFTC’s custody should be disclosed upon request, with the exception of information classified as trade secrets under applicable law, information obtained as part of leniency applications, and information protected under other laws and regulations. Documents are made available for inspection by external counsel for the respondent (but not directly by the respondent) in a data room where the counsel may inspect the documents and prepare a report. In the event of breach of the confidentiality duty by the external counsel, the KFTC may ask the Korea Bar Association to take a disciplinary action or bar the attorney from contacting any KFTC official for a five-year period.

[4] Because the Amended MRFTA also allows individuals to apply for leniency. However, the KFTC will likely revise its current leniency programme to conform to the Amended MRFTA.

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