Fair Trade Commission to Abolish Regulation Imposing Criminal Penalties for Failure to Submit Data

Government to Announce Third Phase of Economic Penal Regulation Improvements on the 12th

As the government has been pushing to ease economic penalty regulations deemed excessive, the Fair Trade Commission (FTC) has decided to abolish regulations that allow criminal punishment for companies that do not cooperate during investigations. This decision is based on the judgment that even without criminal penalties, sufficient cooperation can be obtained from companies by imposing corrective fines and other measures.

According to the FTC on the 11th, the government has initiated efforts to amend the Monopoly Regulation and Fair Trade Act (Fair Trade Act). The main point is to exclude companies from criminal punishment even if they fail to report on their business conditions or submit materials during the investigation process. Under the current Fair Trade Act, the FTC can file charges against companies that refuse to comply with requests for material submission. The FTC has submitted a bill to the National Assembly to delete and ease regulations deemed excessive for companies, including this provision.

The FTC stated that imposing corrective fines alone on companies that refuse to submit investigation materials is sufficient to secure cooperation. An FTC official explained, “Imposing corrective fines on companies that do not submit materials during the investigation process is a more effective measure than criminal punishment,” adding, “If a company does not comply with the order to submit materials, it must pay a corrective fine equivalent to 0.3% of daily sales.” The official also noted, “In fact, there have been no cases of criminal punishment for failure to submit materials.”

Since last year, related ministries such as the Ministry of Economy and Finance and the Ministry of Government Legislation have been working through a task force to improve economic penalty provisions that stifle private business activities. On August last year, they identified 32 economic penalty provisions for improvement across 17 laws in the first phase, and in March this year, they selected 108 penalty provisions to be improved across 51 laws in the second phase. A government official said, “The government has been working to delete unnecessary penalty provisions and convert them to administrative sanctions to avoid imposing excessive burdens on companies due to excessive penalties.” The government plans to announce the third phase of economic penalty regulation improvements on the 12th, summarizing these efforts.

However, since the exclusion of criminal punishment applies only to failure to submit materials during the FTC’s investigation process, criminal charges for failure to submit materials required for designation as a large business group are still possible. For example, the head of a conglomerate who omits materials related to some affiliates necessary for designation as a large business group can still be subject to prosecution by the FTC. An FTC official said, “Since the provisions of the Fair Trade Act requiring submission of materials for business group designation remain unchanged, prosecution is still possible.”