Fines for Unfair Practices Doubled... No Discounts for Companies Like Coupang

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

'Deliberate Deficit Companies' Excluded from Relief Measures
No Excessive Penalties for Minor Violations by SMEs

[Asia Economy Reporter Joo Sang-don] When companies are caught engaging in unfair practices such as collusion, fines can increase up to twice the current amount. Additionally, companies like Coupang that intentionally operate at a deficit to expand market dominance will no longer receive reductions in fines.

On the 3rd, the Fair Trade Commission announced that it has prepared amendments to the "Detailed Standards for Imposing Fines" and eight related fine-related notices under its jurisdiction, and will open them for administrative notice until the 23rd.

The Fair Trade Commission previously revised the Fair Trade Act and its enforcement decree to maintain the minimum range for the imposition rates (percentage fines) and base amounts (fixed fines) by violation type, while increasing the maximum imposition rates up to twice the current levels.

Accordingly, the maximum imposition rate for unfair joint conduct (collusion) will increase from the current 10% (fixed fine of 2 billion KRW) to 20% (fixed fine of 4 billion KRW). For abuse of market dominance, the application will depend on the severity of the violation. If the violation is considered 'less severe,' fines will be imposed at up to 1.5% of related sales as currently practiced. However, for 'serious violations' and 'very serious violations,' the imposition rates will be increased by 1.5 times and 2 times, respectively. The rate for very serious violations will rise from 2.3?3.0% to 3.5?6.0%. For unfair support acts, which are regulated by a single rate, if the violation is judged to be 'very serious,' fines will be imposed by multiplying the unfair support amount by up to 160%.

For minor legal violations by small and medium-sized enterprises (SMEs), the reduction rate for fines has been expanded to avoid excessive penalties. If the deterioration of market or economic conditions or the proportionality between the fine and the unfair gain significantly violates the principles of proportionality and equality, fines can be reduced by up to 30%, and in cases of marked severity, by up to 50%.

However, companies like Coupang that intentionally operate at a deficit to expand market dominance will no longer receive fine reductions. Previously, Coupang’s fines were reduced under the current regulation that allows reductions if the capital erosion rate exceeds 50%, but going forward, reductions will not be granted if the business is deemed 'sustainable.'

A Fair Trade Commission official stated, "By imposing fines up to twice as high for very serious legal violations when necessary, we expect to enhance the deterrent effect of the Fair Trade Act."

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