Interest Refunds Near 18.8 Billion Won: Why the KFTC Keeps Losing Lawsuits Over Fines [Invest&Law]

Companies Rely on Major Law Firms to Contest Fines
Frequent Losses for the Fair Trade Commission Due to "Abuse of Discretion"
Excessive Penalty Calculations Often Overturned in Court
Refund Interest Payments to Companies Continue to Grow <

As companies continue to win lawsuits contesting fines imposed by the Korea Fair Trade Commission (KFTC), it has been revealed that the amount the government pays to companies in 'interest-like refund surcharges,' excluding the principal of the fines, has reached nearly 18.8 billion won over the past five years. Many companies that have been hit with heavy fines head to court to delay enforcement or overturn the outcome, and large law firms representing companies are increasingly succeeding in reversing the KFTC's decisions through aggressive defense strategies.

According to data titled "Annual Status of Fine Refunds," submitted by the KFTC to the office of Choo Kyungho, a member of the National Assembly's Strategy and Finance Committee, on March 18, the total amount of refund surcharges paid by the KFTC to companies from 2021 to last year was 18.79 billion won. Refund surcharges are interest-like payments made to companies in addition to the principal when the fines they have paid are canceled or reduced due to administrative lawsuits or other legal actions.

In October last year, the Supreme Court overturned a lower court ruling that had upheld a 26.7 billion won fine imposed by the KFTC on Naver for alleged manipulation of its shopping search algorithm. The reason was that there was insufficient evidence to prove an anti-competitive effect in the market. In November of the same year, the Seoul High Court ordered the cancellation of a fine of over 90 billion won that the KFTC had imposed on Hyundai Steel for colluding on scrap metal purchase prices. While the court acknowledged that collusion had occurred, it found problems with how the KFTC calculated the fine amount.

The most common reason for these losses is 'abuse or overreach of discretionary power.' This is when the court determines that the fine was set at an excessive amount compared to the actual illegality or degree of responsibility. One legal expert commented, "The KFTC sometimes imposes fines after investigating companies for years, based only on the conclusion that 'collusion appears to have occurred,' but in criminal trials, it is necessary to present concrete evidence of who made which decisions and when."

Another attorney at a major law firm explained, "The KFTC essentially acts as a first-instance court, but the investigators and the commissioners who decide on the cases are part of the same organization. This is similar to a system where judges and prosecutors belong to the same body." He added, "Even during the decision phase, there are cases where, instead of correcting issues in the investigation report, the commission tries to reinforce the logic of the disposition, thereby strengthening its justification, which is why many decisions are overturned in court. There are also instances where commissioners with investigator backgrounds ask questions during hearings that defend the investigation department."

The gap in litigation costs between the major law firms representing companies and the KFTC's legal team is also cited as a reason for the KFTC's losses. One law firm representative noted, "For law firm fair trade teams, the primary defense is to prevent the case from escalating to the criminal stage or to overturn the fine, so there are practical challenges in sustaining the fines imposed by the KFTC."

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