[Exclusive] Fair Trade Commission's 'Misguided Fine' of 1 Trillion Won

First, Overuse of 'Hit First, Ask Later' Penalties
Return Due to Administrative Lawsuit Loss
Excessive Focus on Corporate Regulation Despite Lack of Evidence

[Sejong=Asia Economy Reporter Kwon Haeyoung] The Korea Fair Trade Commission (KFTC) has returned fines amounting to 1 trillion won to companies over the past five years due to losses in administrative lawsuits and other reasons. Considering that the total amount of fines collected during this period slightly exceeded 2 trillion won, about half of the fines were returned to the companies. This has been interpreted as a result of excessive sanctions, as the KFTC initially imposed heavy fines on companies under the pretext of setting an example to deter anti-competitive behavior, only to later refund them. In particular, since companies such as Naver, SPC Group, and Lotte Mart, which were sanctioned by the KFTC, have consecutively filed administrative lawsuits, the scale of fine refunds is expected to increase further following court rulings.

According to the National Assembly Budget Office on the 8th, the KFTC refunded 990.8 billion won in fines due to losses in administrative lawsuits from 2016 to 2020. During the same period, the amount of fines collected (2.0459 trillion won, excluding Qualcomm fines) was 48% returned to companies. The KFTC refunds collected fines when it definitively loses lawsuits filed by businesses or when reasons for cancellation of fine dispositions arise ex officio.

One out of every four KFTC sanctions is overturned by the courts. According to the Fair Trade White Paper last year, from 2015 to 2019, a total of 380 administrative lawsuits were filed against KFTC corrective actions, and among them, 94 cases were confirmed as losses for the KFTC, including partial losses. The loss rate is 24.7%.

The business community points out that the KFTC, as a competition authority, focuses more on regulation than resolving anti-competitive conditions, leading to excessive sanctions. They argue that insufficient evidence leads to excessive fine claims and criminal referrals, which restrict corporate activities and waste administrative resources.

Especially under the current administration, criticism has grown that the KFTC is heading toward a sanction omnipotence due to rising anti-corporate sentiment. Some also point out structural problems within the KFTC, which simultaneously performs the roles of judge and prosecutor, causing its internal adjudication function to malfunction.

An expert on the Fair Trade Act said, "The KFTC benchmarked the U.S. Federal Trade Commission (FTC), but unlike the FTC, the investigation and adjudication functions are not separated, making it difficult for companies to expect fairness in adjudication." He advised, "The independence of the KFTC's adjudication body should be strengthened, or for important matters, the Ministry of Justice, not the FTC, should conduct investigations and leave judgments to the courts, similar to the U.S. system, to discuss reforming the KFTC adjudication system."