Economic Sector "Opposition Proposal Against Favoritism Including the Head Submitted to the Fair Trade Commission"

Violation of Fair Trade Act... Prosecution Only When Serious and Clear
Exclusive Prosecution Rights Arrangement... Exclusion of Seriousness Assessment
Negative Economic Impact... Concerns Over Prosecution Based on Public Opinion

The Fair Trade Commission (FTC) has faced renewed opposition from the business community regarding its plan to revise guidelines to include related family members of the controlling shareholder when filing corporate complaints with the prosecution for private interest appropriation (preferential treatment of orders) under the Fair Trade Act. Six days after issuing a related statement on the 31st of last month, the business community jointly submitted their opposition to the FTC on the 6th.

On the 6th, six organizations including the Korea Economic Association, the Korea Chamber of Commerce and Industry, the Korea Employers Federation, the Korea International Trade Association, the Korea Federation of Medium-sized Enterprises, and the Korea Listed Companies Association announced that they had jointly submitted their opinions titled "Opinions on the Administrative Notice of the FTC’s Revised Complaint Guidelines" to the FTC. They gathered corporate opinions and delivered them to the FTC. The companies expressed that "the revised guidelines, which effectively expand the scope of subjects and reasons for complaints, violate the superior law (Fair Trade Act) and contradict the purpose of exclusive complaint rights."

The revision, which the FTC announced for administrative notice on the 19th of last month, includes provisions that when filing complaints against a business operator (company) for preferential treatment of orders, related parties with special relationships involved in the act should, in principle, also be reported. Additionally, even if the act does not fall under the 'complainable acts' stipulated in the complaint guidelines, complaints can be filed if it falls under 'exceptional complaint reasons.' These include impacts on life, health, and safety, social ripple effects, effects on national finances, damages to small and medium enterprises, and similar reasons.

The business community argued that requiring complaints against related parties, including the controlling family, contradicts the superior law and the intent of exclusive complaint rights. The Fair Trade Act contains regulations that must be observed when filing complaints with the prosecution against related parties for preferential treatment of orders. Article 47, Paragraph 4 states that related parties must have 'ordered or been involved in private interest appropriation' by the business operator. Article 129, Paragraph 2 requires that the degree of violation be objectively 'clear and significant,' severely harming the competitive order. However, the revision states that related parties should be 'in principle' complained against even if the degree of legal violation is not objectively clear or significant. The business community said this "violates the complaint requirements of the superior law."

[Image source=Yonhap News]

Regarding the exceptional complaint reasons added in the revision, the business community said they are "unclear and abstract requirements," which could conflict with the superior law. They stated, "(The revision) not only exceeds the scope of complaint requirements under the superior law but also makes it practically impossible for subjects to predict when they might be subject to complaints." More seriously, they pointed out that "even if related parties were not involved in violations of preferential treatment regulations, there is a possibility they could be complained against based on public opinion."

The revision was also said to contradict not only the Fair Trade Act but also the intent of exclusive complaint rights. Exclusive complaint rights delegate the investigation and judgment of economic cases, which are difficult for the judiciary to assess, to the FTC. In cases of serious legal violations, the right to file complaints is also exercised. This grants the FTC a quasi-judicial role. The business community said, "If the FTC files complaints against related parties without proving the degree of involvement or the seriousness of the legal violation, citing the difficulty of clearly proving the involvement of related parties as stated on the 19th of last month, it contradicts the purpose of the judiciary delegating exclusive complaint rights to the FTC."

They also argued that the revision does not align with the policy direction of the Yoon Seok-yeol administration. In August last year, the government decided at the 'Regulatory Innovation Strategy Meeting' to reduce criminal penalties for businesspeople and reform penal provisions. Representatives of the economic organizations participating in this FTC petition said, "The revision contradicts the government’s policy direction, which focuses on easing economic penalties and revitalizing the economy," and added, "The revision, which does not conform to the fundamental principles underlying our legal system, should be thoroughly reconsidered."

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