"Better Than the Lottery": Reporting Collusion Could Earn Hundreds of Billions... KFTC Announces Administrative Notice to Abolish Whistleblower Reward Cap

Complete Removal of the 3 Billion Won Cap on Collusion and 2 Billion Won Cap on Unlawful Support
Reward Standard Set at 10% of Total Fine

The Korea Fair Trade Commission will abolish the ceiling on rewards for reporting unfair trade practices, such as corporate collusion or improper support, and will significantly increase the payout rate for such rewards to up to 10% of the total fine imposed. As a result, whistleblowers who report large-scale collusion cases involving billions of won could potentially receive unprecedented rewards amounting to hundreds of billions of won.

The Korea Fair Trade Commission announced that it has prepared a draft amendment to the “Regulation on Rewards for Whistleblowers of Violations of the Monopoly Regulation and Fair Trade Act and Related Laws,” which will be open for public comment from May 21 until June 10. This measure aims to provide strong incentives for internal whistleblowing regarding covert corporate collusion and to instill a sense of vigilance among companies that insiders can report violations at any time, thereby fundamentally deterring illegal conduct. After the public notice and related procedures, the revised regulation is scheduled to be finalized and implemented within the first half of the year.

Ceiling of 3 Billion Won Lifted, Unified at ‘10% of Total Fine’

The most significant aspect of the amendment is the abolition of reward payment limits for each type of violation. Previously, the maximum payout was set at 3 billion won for unfair concerted acts (collusion), 2 billion won for improper support or private interest transactions, and 500 million won for violations of subcontracting or franchise business regulations. There had been criticism that these limits were insufficient compensation for whistleblowers, who must bear the risks of job loss and retaliation. The Korea Fair Trade Commission has now removed these caps to ensure that compensation is commensurate with the scale of the case.

The calculation method will also be completely overhauled. Previously, the payout was based on a complex calculation involving a rate of 1–20% depending on the fine bracket, making it difficult for whistleblowers to predict the amount they would receive. Going forward, the standard reward will be set at “10% of the total fine,” and this amount will be multiplied only by the evidence level (ranging from 100% for the highest level to 30% for the lowest), thereby simplifying the process.

For example, if a whistleblower reports collusion with the highest level of evidence and a fine of 100 billion won is imposed, they would have received only 2.85 billion won under the previous formula, but under the revised rule, they will receive the full 10%, which is 10 billion won. In addition, materials related to “intent to support”—which are crucial to proving improper support or private interest transactions by controlling shareholders and their families—will now be newly included as admissible evidence to further encourage internal reporting.

Blocking ‘Loopholes’ That Hamper Reward Collection via Lawsuits

Rigorous safeguards have also been introduced to prevent abuse of the system and enhance its effectiveness. If a whistleblower does not fulfill their social responsibilities, or if there are issues with the degree of involvement in the violation or cooperation with the investigation, a new set of specific criteria allows for the reward to be reduced by up to 30%. However, an internal process will be established to exempt insider whistleblowers from criminal liability, and protection measures will be firmly guaranteed for public interest whistleblowers.

In particular, the timing of reward payments will be substantially adjusted. Under the current system, the full reward must be paid within three months after a decision by the Korea Fair Trade Commission, making it difficult to reclaim rewards if the imposed fine is later reduced or canceled through litigation. From now on, a “basic reward” equivalent to the minimum payment amount will be paid once the fine is first deposited into the national treasury, and the “remaining reward” based on the final confirmed fine will be paid only after all litigation and appeals are fully resolved, thus implementing a two-stage payment process.

New ‘Incentive Fund’ to Provide Stable Resources from August

Concerns that government budgets could be depleted by reward payments amounting to hundreds of billions of won have been addressed through consultations with fiscal authorities. The Ministry of Planning and Budget is currently working to establish a “Public Interest Whistleblower Incentive Fund,” targeted for launch in August, to ensure stable support for whistleblowing and reward payments across all ministries. Once this fund is established, large reward payments—including those by the Korea Fair Trade Commission—will be stably managed using this unified funding source.

The Korea Fair Trade Commission stated, “By demonstrating a resolute stance against unfair practices and actively encouraging both internal and external whistleblowers to report illegal activities, we aim to send a clear signal to companies that any violation will inevitably be detected, thereby further strengthening deterrence against breaking the law.”

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