Corporate Sector Suffocated by ‘Quadruple Collusion Investigations’ [Fair Trade Investigation in Chaos] ①

Fair Trade Commission, SCIO, Police, and National Investigation Headquarters:
A Flood of Investigative Bodies

Confusion Over Request-for-Complaint Right and Leniency System
Lower Barriers for Complaints and Proliferation of Investigative

"When there are too many regulators, only companies end up suffering."

This is a growing concern voiced inside and outside the business community regarding the issue of investigative authority over fair trade cases. Until now, cases of collusion, unfair support among affiliates, and abuse of market dominance in fair trade have operated within a tense system of checks and balances between the exclusive authority of the Fair Trade Commission (FTC) to initiate criminal complaints and the prosecution's power to request indictment. The FTC has acted as the first gatekeeper, filtering out indiscriminate criminal prosecution, while the prosecution has used criminal leniency and compulsory investigation powers to push the sometimes passive FTC into action and sharpen the focus of investigations.

However, with the launch of the Serious Crime Investigation Agency (SCIA) scheduled for October, this previously stable equilibrium is starting to show cracks. The debate over abolishing the exclusive complaint authority has surfaced, and with moves to eliminate the prosecution’s direct investigative powers, it remains undecided whether the power to request indictment and criminal leniency will be placed under the new public prosecution office or the SCIA. As the threshold for filing complaints is lowered and investigative bodies proliferate, the investigation system is expected to change drastically. Companies are expressing confusion, asking, "Who will investigate us, and who will prosecute?"

Companies to Face 'Quadruple Investigations'

According to legal professionals on May 6, the exclusive complaint authority has served as a "breakwater," ensuring that criminal procedures for specialized economic crimes such as collusion only begin after the FTC has first reviewed and filed a complaint. This was a measure to prevent business activities from being paralyzed by frequent allegations and complaints. However, as criticism continued that the FTC was favoring companies, the prosecution responded with the "power to request indictment," taking control through preemptive raids and investigations, thus providing a check on the FTC's power.

The real problem arises with the planned separation between investigation and prosecution under the new system involving the public prosecution office and the SCIA. Under current SCIA legislation, fair trade investigations are included in its scope. In this scenario, the tangled web of procedures becomes uncontrollably complex. For a single case of collusion, unfair support, or suspicion of abuse of market dominance, a multilayered structure emerges, involving: ▲ FTC investigation ▲ complaint by the SCIA chief ▲ case allocation among investigative agencies such as the SCIA, National Investigation Headquarters, and the police ▲ determination by the public prosecution office regarding warrants and indictments—all happening in parallel.

If the exclusive complaint authority is also abolished, complaints could pour in from local governments or civic groups. Eunhee Lee, professor in the Department of Consumer Studies at Inha University, pointed out, "If consumer organizations and others are given the authority to file complaints, companies will be plagued by indiscriminate complaints," adding, "Even if a complaint ends with a finding of no wrongdoing, the mere process of shuttling between police stations for questioning imposes significant fatigue and unnecessary confusion on companies."

An attorney at a major law firm expressed concern, stating, "The Fair Trade Act applies not only to large corporations but also to individual business owners and small and medium-sized enterprises, as seen in cases of collusion among butchers," and continued, "The FTC's investigations are voluntary and take into account the burden on companies, but if investigative agencies conduct indiscriminate compulsory investigations such as raids without expertise, small businesses could see their operations paralyzed."

Is There Sufficient Investigative Expertise?

The bigger concern is the lack of professional expertise. Fair trade cases are not simple crimes where one can just say, "You two met, so you must have colluded." One must comprehensively analyze the market structure, business practices, and actual effects on competition.

A former FTC official now working as a lawyer at a major law firm explained the unique nature of fair trade cases using the example of app market commission fees. He said, "In fair trade cases, the legality of the same action can depend on market position or share. In the past, when Google followed Apple in taking a 30% commission from app market transactions, it was not an issue in the early days because Google had little market share. However, as the Android ecosystem grew, it became an abuse of market-dominant position. It is almost impossible for investigative agencies with no experience in advanced economic analysis to make such judgments immediately."

There are also warnings that legitimate management decisions could inadvertently lead to excessive criminal penalties. A lawyer from Seocho-dong with abundant experience in fair trade investigations commented, "In cases of business favoritism or unfair support, such decisions are often based on security or efficiency considerations and are perfectly legitimate business judgments. However, if multiple investigative agencies compete to conduct compulsory investigations, there is a high risk that these cases will be forcibly linked to charges such as breach of trust and spin off into separate investigations, which could severely intimidate companies."

Leniency System Also in Confusion

Even the "leniency program"—the key weapon in detecting collusion, which allows for reduced penalties for voluntary reporting—could see its procedures become tangled. If investigative authority is split among multiple bodies, the calculation of "where and when to confess in order to receive protection" becomes increasingly complex. A fair trade specialist lawyer at a large law firm explained, "When companies apply for leniency with both the FTC and the prosecution, there are often subtle differences in the duration or scope of collusion reported. When investigative agencies are divided, discrepancies in such information can upend the order of companies receiving first-priority immunity, leading to utter chaos. Whether through unification or by establishing a robust real-time information-sharing system, a unified approach is urgently needed."

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