Annual Sales Threshold for Exemption from Unfair Practice Review Raised from 2 Billion to Under 5 Billion KRW

Fair Trade Commission Revises Rules on Case Procedures, Guidelines for Unfair Trade Practices Review, and Notification Exemption Criteria for Telemarketing Business

[Sejong=Asia Economy Reporter Joo Sang-don] The annual sales threshold for small-scale businesses exempt from unfair trade practice reviews due to minimal market impact will be raised from the current under 2 billion KRW to under 5 billion KRW.

The Fair Trade Commission announced that it has finalized the amendment to the Unfair Trade Practice Review Guidelines (Regulations) containing this change, which will take effect from the 29th.

The current review guidelines stipulate a safe zone where, in principle, review procedures are not initiated for small-scale businesses even if there are signs of unfair practices, considering the minimal restriction on competition. This expands the scope of exemption from review, which has not been changed since the guidelines were established in 2004, taking into account economic growth.

The exemption from unfair trade practice review applies mainly to refusals to deal, discriminatory treatment, exclusion of competitors, and tied transactions, which are assessed primarily on competition restriction. Cases focusing on unfairness, such as unfair customer inducement, forced transactions, abuse of superior bargaining position, and interference with business activities, are excluded from the exemption.

The Fair Trade Commission also amended the "Rules on the Operation of Meetings and Procedures for Cases of the Fair Trade Commission (Notice)." First, it raised the upper limit of the annual sales (or budget) of respondents eligible for warning measures for minor violations by 1.5 times. Accordingly, for unfair joint acts, the annual sales threshold for more than half of the colluding participants has changed from 2 billion KRW or less to 3 billion KRW or less. For unfair trade practices, the threshold has increased from under 5 billion KRW to under 7.5 billion KRW.

The warning criteria have been specified. The standards for minor violations under the Franchise Business Act, Large-scale Distribution Business Act, and Agency Act have been concretely defined, allowing warnings for all types of cases where damages to suppliers are minor and warnings are typically issued repeatedly. Also, when extending the case processing period, the notifier and others must be notified, but notification may be omitted if there is concern about data destruction or manipulation.

Through the notice on exemption criteria for telemarketing business registration, the transaction criteria (number of transactions and transaction scale) exempting telemarketing business registration obligations have been relaxed to expand the scope of exemption. The current exemption criteria apply if the number of transactions through telemarketing in the past six months is fewer than 20 or the transaction scale is under 12 million KRW. The revised criteria relax this to fewer than 50 transactions in the previous year or being a simplified taxpayer under the Value-Added Tax Act, reducing the burden on small-scale businesses.

A Fair Trade Commission official stated, "The Commission plans to actively identify and continuously improve necessary matters to rationalize unreasonable standards in case processing and enhance the reliability of Commission decisions. While strictly sanctioning legal violations, we will continue institutional development that can alleviate corporate burdens and stimulate market innovation motivation."