Fair Trade Commission Announces Administrative Notice on Amendments to Case Procedure Rules and Guidelines for Unfair Trade Practices
Exemption from Review for 4 Types of Unfair Trade Expanded from Annual Sales of 2 Billion to 5 Billion Won
[Asia Economy Reporter Moon Chaeseok] The scope of small-scale businesses that end with a 'warning' before administrative measures such as fines will be expanded. The exemption from review for four types of unfair trade, including refusal to trade, will also be expanded from annual sales under 2 billion KRW to under 5 billion KRW. This is expected to reduce the burden on companies regarding administrative actions.
The Korea Fair Trade Commission (KFTC) announced that it will publicly notify the proposed amendments to the "Rules on the Operation of KFTC Meetings and Case Procedures" (notice) and the "Guidelines for the Review of Unfair Trade Practices" (directive) for 20 days from the 28th until next month 24th. This is a follow-up measure to the KFTC's "Plan to Promote Active Administration" announced last December.
The proposed amendment to the "Case Procedure Rules" includes provisions to promptly handle minor legal violations and expand the scope of small-scale businesses that end with a 'warning' to reduce their legal violation risks.
For unfair joint acts, the warning measure previously applied only if half or more of the colluding participants each had annual sales of 2 billion KRW or less, but this scope will be expanded to 3 billion KRW or less. The prohibited acts by business associations will be expanded from a budget amount under 100 million KRW to under 150 million KRW.
Unfair trade practices will be expanded from annual sales under 5 billion KRW to under 7.5 billion KRW, unfair subcontracting practices from annual sales (construction capability evaluation amount) under 10 billion KRW to under 15 billion KRW, and violations of the Franchise Business Act from annual sales under 1 billion KRW to under 1.5 billion KRW, respectively.
The warning criteria will be specified to reduce unnecessary risks. Specific standards for minor violations under the Franchise Business Act (such as violations of the obligation to deposit franchise fees), the Large-scale Distribution Business Act (such as failure to provide written documents), and the Agency Act have been defined.
To strengthen the defense rights of the investigated parties, remote video conferencing will be introduced. The investigated parties will be notified of the investigation progress every quarter.
The key point of the proposed amendment to the "Guidelines for the Review of Unfair Trade Practices" is to expand the exemption from review from annual sales under 2 billion KRW to under 5 billion KRW. This applies to four types of unfair trade practices: refusal to trade, discriminatory treatment, exclusion of competitors, and tied transactions. These are types mainly reviewed for competition restrictions.
However, the amendment does not apply to unfair practices mainly reviewed for unfairness, such as unfair customer inducement, forced transactions, abuse of superior bargaining position, and obstruction of business activities.
A KFTC official said, "The burden on small-scale businesses regarding investigations and legal sanctions will be alleviated," and added, "The clarity and efficiency of investigation and deliberation procedures will improve, ensuring predictability for both complainants and investigated parties, and trust in the KFTC will be enhanced through swift case handling."
The KFTC plans to finalize and implement the amendments after hearing opinions from stakeholders and related ministries during the public notice period and passing resolutions at the plenary meeting.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
