'A 200 Million Won Fine Is Just Company Money... 'Personal Liability' Needed to Pressure Executives [Chaotic Fair Trade Investigations] ⑤

Illicit Gains from Collusion Exceed 1 Trillion Won
Criminal Penalties Remain Excessively Lenient
Now Is Not the Time to Debate Abolishing Exclusive Complaint Rights
Expanding Complaint Channels and Investigative Agencies Instead
Setting Clear Standards for Criminal Cases Should Come First

Even when a massive cartel that secures more than 1 trillion won in illicit gains is uncovered, the criminal fines imposed on corporations in court cannot exceed 200 million won. Even if the Korea Fair Trade Commission imposes administrative fines amounting to several hundred billion won, companies regard these as manageable costs and engage major law firms to contest the penalties in administrative litigation.

This is why there is analysis that, to fundamentally deter collusion, criminal liability targeting owners and individual executives must be enforced in parallel. The problem is that current discussions focus more on abolishing exclusive complaint rights or reallocating investigative authority than on overhauling the criminal punishment system. As a result, debates over which acts should remain criminal matters are being sidelined.

◆ Administrative fines are company money, criminal liability targets the top

Legal experts first point out the “disconnect” in the current criminal punishment system under the Fair Trade Act. Although collusion is considered a representative and serious economic crime, punishment for participants is limited to imprisonment of up to three years or fines of up to 200 million won. Even then, in actual trials, sentences are often suspended or only minor fines are imposed. Compared to major countries like the United States, which treat collusion as a major crime by imposing lengthy prison sentences and hefty criminal fines, the level of criminal punishment in Korea is frequently criticized as excessively low.

A competition law expert at a leading law firm commented, “Simply imposing administrative fines on companies for collusion is insufficient as a deterrent, and the level of criminal punishment is not strong compared to major countries overseas. While companies may view administrative fines as a business expense, the pressure fundamentally changes when criminal liability is imposed on representatives or executives personally.” Administrative fines are borne by the company, but a prosecution investigation can lead to the arrest or imprisonment of owners and executives, making the nature of the sanction distinctly different.

For this reason, there are growing calls that cases with clear intent and collusion structures, like price-fixing, cannot be adequately addressed through administrative penalties alone. Unlike administrative fines paid from company funds, parallel criminal procedures that hold individuals accountable are necessary to create deterrence that influences executive decision-making.

◆ ‘Punitive provisions’ are more urgent than abolishing exclusive complaint rights

On the other hand, another problem is that the scope of criminal punishment is currently too broad. Under the current system, even cases requiring sophisticated market definition and economic analysis, such as abuse of market dominance or improper support, are lumped together under broad punitive provisions. Merely expanding the channels for criminal complaints in such cases risks promoting excessive criminalization and confusion in investigations.

A former Fair Trade Commission attorney stated, “If we are to revise the exclusive complaint right, we must also overhaul the punitive provisions. It is realistic to retain only serious crimes like collusion and carefully exclude the rest.” Even for the same type of fair trade violations, it is unreasonable to apply criminal procedures equally to both cases where the illegality of the act itself is clear and coercive investigation is necessary (such as price-fixing), and cases where economic analysis and market assessment are key.

As legislative discussions in the political sphere focus only on abolishing exclusive complaint rights and reallocating investigative authority, it is increasingly difficult to avoid criticism that proper standards for determining which fair trade violations should remain criminal matters are being neglected.

There are also considerable concerns about the indiscriminate expansion of complaint rights. Abolishing exclusive complaint rights may appear to strengthen consumer protection, but simply broadening the channels for criminal complaints without revising punitive provisions is more likely to increase the number of investigative agencies rather than clarify the substance of cases. In particular, if allegations raised by competitors, stakeholders, or civic groups are immediately linked to criminal proceedings, even cases that result in acquittal could be subject to prolonged and overlapping investigations.

Expanding investigative authority does not automatically lead to more effective enforcement. According to an internal review by the Supreme Prosecutors’ Office in 2022, if the Fair Trade Commission’s investigative powers are expanded without procedural safeguards, there are concerns about bypassing the warrant system, failing to inform suspects of their right to remain silent, and limited admissibility of evidence. Merely increasing authority could, in fact, exacerbate controversies surrounding due process.

The compromise solution proposed by experts is relatively clear. Collusion should be distinguished from other fair trade violations because the illegality of the act itself is more evident and the secretive nature of collusion necessitates compulsory investigation and the pursuit of individual accountability. Simple administrative violations should be excluded from criminal punishment to reduce the burden on companies and prevent confusion in investigations, while serious crimes like collusion that directly threaten the national economy should be managed via a separate criminal track.

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