Executives Out for Collusion, Companies Expelled for Repeat Offenses... KFTC to Eradicate Collusion with Strong Measures

Going forward, executives at companies that lead or participate in collusion will be dismissed, and companies that repeatedly engage in collusion may have their registrations or licenses revoked. The introduction of “structural measures,” such as forcing the sale of a business to a third party, is also being considered.

Koo Yoonchul, Deputy Prime Minister and Minister of Strategy and Finance, is presiding over the Special Management Task Force on Cost of Living. Ministry of Strategy and Finance.

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On April 23, the Korea Fair Trade Commission announced its “Plan to Eradicate Recurrent Collusion” at a meeting of the Special Management Task Force for People’s Livelihood Prices. This is a strong measure aimed at putting an end to the chronic pattern of major market players engaging in collusion despite being fined. Emphasis has been placed on strengthening economic sanctions and isolating both the individuals and companies leading collusion from the market through “personnel and structural expulsion.”

According to the plan, the government is considering introducing an executive dismissal order, which would require companies involved in collusion to dismiss or suspend involved executives. This measure aims to address the fact that collusion often recurs when the same executives or personal networks between companies remain intact. Restrictions on re-employment in the same industry after dismissal may also be imposed. Similar systems are in place in the United States, United Kingdom, and Australia. In Korea, the Financial Services Commission implemented a system in April last year that restricts the appointment and tenure of executives at listed companies or financial firms for individuals who violate the Capital Markets Act through unfair trading or illegal short selling.

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Sanctions on companies will also be elevated to the level of “market expulsion.” For companies that repeatedly engage in collusion, the Korea Fair Trade Commission will establish a legal basis to directly request the cancellation of business registration or suspension of business operations. The plan is to expand examples already applied in industries such as construction-where repeated bid rigging can lead to deregistration under the Framework Act on the Construction Industry-to other sectors where collusion frequently occurs. A system will be introduced whereby relevant ministries can be requested to revoke registrations or suspend operations, and those ministries would then implement the actions.

If there are structural problems in a business that cause repeated collusion, the introduction of “structural measures” to resolve those issues is also under consideration. A Korea Fair Trade Commission official stated, “Measures could include forcing the sale of a collusion-involved business to a third party, among others,” adding, “Specific plans will be announced after further review.” The goal is to introduce all of these measures-including structural measures, executive dismissal orders, and the expulsion of colluding companies from the market-in the second half of the year.

Ju Byungki, Chairperson of the Korea Fair Trade Commission, stated, “We will remain vigilant and do our utmost to monitor and rectify market-disturbing acts and unfair trade practices that exploit external supply chain instability.”

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