From now on, 'Strategic Deficit Companies' like Coupang will no longer receive reduced fines

Fair Trade Commission Announces Administrative Notice for Amendments to 9 Administrative Rules Including 'Fair Trade Act Penalty Notice'

[Sejong=Asia Economy Reporter Joo Sang-don] Going forward, the Fair Trade Commission (FTC) will consider 'whether business continuity is difficult' along with the realistic burden capacity of companies when reducing fines. This means that companies like Coupang, which intentionally operated at a loss to expand market dominance, will not have their fines reduced.

On the 3rd, the FTC announced that it will prepare and administratively announce amendments to the "Detailed Standards for Imposing Fines" and eight other fine-related notices under its jurisdiction, reflecting this content.

Under current regulations, if the capital impairment ratio is 50% or higher, fines can be reduced by more than 50% without considering other conditions. This is because companies in a capital impairment state are considered to lack realistic burden capacity, so fines are mitigated. Due to this, in August this year, the FTC imposed a corrective order and a fine of 3.297 billion KRW on Coupang for unfair practices such as demanding suppliers to raise prices on competing online malls to maintain its lowest price policy. Based on the mitigation reasons under the current fine notice, the FTC reduced Coupang's fine from the original 7 billion KRW to 3.297 billion KRW.

An FTC official explained, "At that time, the commission did not consider that Coupang was unable to bear the fine, but reduced the fine because it met the mitigation conditions under current regulations. Taking this as an opportunity, companies like Coupang that pursue planned loss strategies are excluded from mitigation reasons."

Accordingly, going forward, when considering mitigation based on realistic burden capacity, it is clearly stipulated that even if the capital impairment ratio is 50% or higher, 'whether business continuity is difficult' will be additionally considered.

Along with this, the maximum fine rate has been differentially increased up to twice. For very serious violations, the maximum fine rate for abuse of market dominance has been raised from 3.0% to 6.0% of related sales, and for unfair support acts, from 80% to 160% of the unfair support amount.

Fixed fines will only be exceptionally imposed when sales cannot be calculated, and the basic calculation standards can be adjusted considering the size of the business. Also, the upper limit regulation for fixed fines and the fine imposition decision stage will consider the size of the business (whether it is a small or medium enterprise), market and economic conditions, and the scale of fines relative to unfair gains, allowing up to a 50% reduction.

The FTC plans to collect opinions from stakeholders during the administrative announcement period and implement the notice in line with the enforcement date of the amended Fair Trade Act on December 30, 2021.

This content was produced with the assistance of AI translation services.