Fair Trade Commission Chairman: "Strict Sanctions on 12 Companies Confirmed to Violate Laws in Franchise Mandatory Item Unfairness Allegations"

"Bank LTV Collusion Reexamination... To Verify Facts Regarding Newly Raised Claims"

Han Ki-jung, Chairman of the Fair Trade Commission, is giving a proposal explanation related to the budget at the full meeting of the Political Affairs Committee held at the National Assembly on the 12th. Photo by Kim Hyun-min

Han Ki-jung, Chairman of the Fair Trade Commission, stated, "If any legal violations are confirmed in the investigation of unfair practices related to mandatory franchise items by 12 dining companies, strict sanctions will be imposed."

At a press briefing held at the Government Complex Sejong on the 27th, Chairman Han said, "As we are nearing the completion of institutional measures to eradicate unfair practices related to mandatory franchise items, we plan to promptly handle cases of unfair practices related to essential items in the dining industry."

The Fair Trade Commission has made the issue of mandatory franchise items a key area of legal violation monitoring this year and has been investigating 13 cases related to industries frequently encountered by the public, such as hamburgers, chicken, and pizza. The investigation focuses on whether franchise headquarters forced franchisees to purchase industrial products like straws, kitchen detergents, and wet wipes at inflated prices.

Chairman Han said, "Sanctions against Korea Papa John's have been completed, and for the remaining 12 cases related to hamburgers, chicken, and pizza, if legal violations are confirmed through the commission's review, strict sanctions will be imposed." He added, "Since franchising is directly linked to the livelihoods of about 350,000 small business owners, we will continue efforts such as institutional improvements and market monitoring."

Regarding the decision to reexamine the collusion in secured loans by the four major commercial banks, he explained, "During the plenary review process, several new claims were raised by the examiners and the respondents, leading to the decision for reexamination to verify the facts. This does not mean the investigation itself was inadequate."

Earlier, on the 21st, the Fair Trade Commission ordered a reexamination of suspicions of collusion on the loan-to-value ratio (LTV) among the four major commercial banks: KB Kookmin Bank, Shinhan Bank, Hana Bank, and Woori Bank. The commission views that the banks shared LTV information and colluded on secured loan transaction conditions, restricting competition in the secured loan market. However, the banks argue it was merely information exchange, not collusion, and that there was no unfair profit.

Regarding the mobile gift certificate win-win council, he said, "In April, a public-private win-win council was established to discuss three key issues: fees, settlement cycles, and refund rates for expired gift certificates. Following the delivery app win-win council, we aim to achieve meaningful results."

Chairman Han announced, "We plan to announce next month the results of efforts to improve competition-restricting regulations that cause public cost burdens and hinder corporate innovation." Since October last year, the Fair Trade Commission has identified tasks, prepared improvement plans, and consulted relevant ministries, reaching agreements on regulatory improvement measures for a total of 22 tasks.

The selected tasks include regulations that cause public burden or inconvenience, restrict choice, and entry regulations that block market entry of excellent small and medium enterprises in public procurement markets. He said, "The specific details will be finalized and announced next month after a meeting of related ministers chaired by the Prime Minister."

Earlier this year, the Fair Trade Commission announced in its work plan that it would produce results within the year for tasks aimed at creating innovation engines in preparation for future and new industries such as artificial intelligence (AI). Chairman Han explained, "We will soon publish an AI policy report that reveals the analysis results of competition and consumer issues in the AI industry, especially the ‘generative AI market,’ along with policy directions for institutional improvements."

Specifically, he noted, "It will include responses to issues such as expansion through mergers and acquisitions (M&A) or corporate alliances, and consumer harm related to data collection and utilization." Regarding the e-commerce market, he also stated, "We will release a policy report next month containing analysis results on market structure changes such as the growth of China commerce and potential competition-restricting effects."