Penalty Surcharges to Exceed Illicit Gains for Hoarding... Government Announces Strong Response to Market Disruption

Government Announces "Measures to Enhance the Effectiveness of Price Stabilization Policies"

Includes Enforcement Fines, Penalty Surcharges, and Compulsory Sales for Market Disturbance

The government has introduced strong price stabilization measures to address shortages of goods and surging prices caused by the war in the Middle East. Going forward, businesses caught disrupting distribution—such as through hoarding—will face mandatory sales orders, enforcement penalties, and fines that exceed their unlawful gains. Seized goods will be forcibly sold on the market immediately, even before court rulings are issued.

Enforcement Penalties for Refusing to Sell... Immediate Public Auction of Seized Goods Before Verdict

In a briefing on the results of the first special crackdown on syringe hoarding held by the Seoul Regional Food and Drug Administration last April, the same syringe product that was seized is displayed. Photo by Yonhap News.

On the 21st, the Ministry of Economy and Finance and other related ministries announced a plan to enhance the effectiveness of price stabilization measures at a special task force meeting on essential goods prices, chaired by Deputy Prime Minister and Minister of Economy and Finance Koo Yooncheol. This preemptive action was prompted by concerns that rising petroleum prices and other factors could further drive up inflation.

The government has decided to introduce strong financial sanctions and mandatory distribution measures to block distribution manipulation tactics. First, a new regulation will allow the relevant ministry to issue a “disposal order” for goods if emergency supply adjustment measures or anti-hoarding bans are violated. If a business refuses to comply and does not release the goods into the market within the set period, enforcement penalties will be continuously imposed until the goods are actually disposed of, applying significant pressure. At the same time, to address supply shortages, a legal basis will be established for a “special sale exception,” allowing goods seized by law enforcement due to hoarding to be auctioned and supplied to the market immediately, even before court decisions are finalized.

Illicit profits gained through hoarding will be reclaimed in amounts exceeding those gains. The government plans to introduce regulations that impose fines surpassing unjust gains for violations of emergency supply adjustment measures and anti-hoarding bans, thereby eliminating economic incentives for such illegal activities. To prevent businesses from preemptively disposing of goods and concealing proceeds before crackdowns begin, the government will actively utilize “pre-indictment preservation orders,” which freeze criminal proceeds and assets during the investigation stage. In addition, a new “report reward system” will be introduced to compensate whistleblowers according to their contribution in reporting violations.

Amending Ineffective Current Laws... “Limitations of Relying on Voluntary Sales”

The government has adopted these tough measures in response to persistent criticisms that current price stabilization policies are ineffective on the ground. Previously, when problems occurred in the supply chain, the government could impose measures such as setting maximum prices, emergency supply adjustments, and anti-hoarding bans. However, the enforcement focused mainly on post-facto criminal penalties—such as imprisonment or fines—failing to eliminate the economic incentives for illegal distribution.

Kang Giryong, Assistant Vice Minister at the Ministry of Economy and Finance, stated, “Currently, there is a corrective order system for hoarding, but it only requires companies to ‘comply with storage standards,’ so in reality, we have had to rely solely on voluntary sales by distributors. With these new measures, we will firmly restore order in market distribution and root out violations with strong sanctions.”

To eradicate hoarding at the import and customs stages, the government will immediately revise the Enforcement Decree of the Price Stabilization Act within May, delegating crackdown authority to the Commissioner of the Korea Customs Service. The government will then prepare an amendment to the “Act on Price Stabilization,” which will include key mandatory measures such as enforcement penalties, special sale exceptions, and new fine provisions, aiming to complete the legislative process by July or August and submit the bill to the National Assembly in the regular session.

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