FKCCI "Concerns Over Fairness in Similar Regulations Due to Revision of Guidelines for Unfair Support Acts"

Submission of Opinions to the Fair Trade Commission on Partial Amendments to the 'Review Guidelines for Unfair Support Practices'

Provided by the Federation of Korean Industries

[Asia Economy Reporter Kim Pyeonghwa] The Federation of Korean Industries (FKI) announced on the 6th that it submitted an opinion to the Fair Trade Commission expressing concerns that the partial amendment to the "Guidelines for Reviewing Unfair Support Acts," which the government administratively announced last month, could undermine fairness among similar regulations. The Fair Trade Commission stated in the administrative notice that it aims to improve regulatory predictability by establishing safe zones for each transaction type.

The FKI pointed out that the administrative notice sets a narrower safe zone compared to the "Guidelines for Reviewing Unfair Profit Provision to Special Related Parties (Private Interest Appropriation Acts)," which could undermine fairness among similar regulations. Both the private interest appropriation regulation and the unfair support act regulation aim to prohibit unfair benefits accruing to special related parties, so their functions and penalty levels are similar.

The FKI noted that although both private interest appropriation acts and unfair support acts apply the same penalty standards?imprisonment for up to three years or a fine of up to 200 million KRW, and a surcharge of less than 10% of the average sales over the past three years?the administrative notice sets the safe zone for goods and service transactions at "less than 10 billion KRW in annual total transaction amount," which is only half of the 20 billion KRW safe zone in the private interest appropriation guidelines.

Provided by Jeongyeongryeon

Additionally, the FKI pointed out that changing the safe zone calculation criterion for fund transactions from the "amount of support due to support acts" to "the total transaction amount between the support provider and recipient" could actually narrow the scope of the safe zone. The administrative notice newly establishes total transaction amount criteria for asset and real estate leases, as well as goods, services, and labor provision transactions, but the FKI argues that the safe zone is set narrower than in the private interest appropriation guidelines, despite the similar regulatory nature.

The FKI recommended improving the safe zone scope in the administrative notice to the level of the private interest appropriation guidelines and adding the amount of support due to support acts as a criterion for calculating the safe zone. Yuh Hwan-ik, head of the FKI Industrial Headquarters, said, "Expanding the safe zone for unfair support act regulations is positively evaluated," but emphasized, "It is necessary to adjust the scope of the safe zone realistically to enhance the effectiveness of the system."

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