South Korea competition chief backs revenue-based penalties for refusing investigations
In short
South Korea's Fair Trade Commission chairman Ju Byeong-gi (주병기) called on October 25 for stronger penalties when companies refuse investigations, citing about 1% of total revenue as an example. He said existing administrative investigation powers were generally sufficient without granting compulsory investigative powers.
Read the full story 1 min read
South Korea's Fair Trade Commission chairman Ju Byeong-gi (주병기) called on October 25 for stronger financial penalties against companies that refuse investigations. Speaking on KBS, he cited a penalty of about 1% of a company's total revenue as an example of a more effective enforcement tool. He said most businesses cooperate with administrative investigations and that the commission did not currently need compulsory investigative powers. [ 1 , 5 ]
The remarks followed Coupang's refusal of an on-site investigation and Hanwha's refusal to submit documents. Yonhap reported that some laws overseen by the commission allow financial penalties, compliance payments or criminal sanctions for obstruction. Under the large-scale retail law involved in the Coupang investigation, however, obstruction can currently lead only to an administrative fine. Ju called for amendments allowing stronger financial penalties and payments to compel compliance with document requests. [ 1 , 4 ]
Seoul Economic Daily reported that the commission had tried to inspect Coupang around August over allegations that it shifted the cost of consumer discount coupons onto suppliers. Coupang refused because it had not received seven days' advance notice under the administrative investigation law, the report said. The commission maintains that advance notice was not required. Ju said a report proposing an administrative fine for obstruction had been sent and deliberations were underway. [ 10 ]
Ju also rejected US claims that the commission discriminates against American companies, saying enforcement applies without regard to nationality. He said domestic companies had faced higher penalty rates, while larger absolute penalties against companies such as Google and Microsoft reflected their greater relevant revenue. On allegations that information about a trademark-fee investigation had leaked to Hanwha, he said the matter was not confirmed and was being examined internally. [ 1 , 5 , 10 ]
Why it matters
The proposal follows Coupang's refusal of an on-site investigation and Hanwha's refusal to provide documents. Ju said legislation should allow stronger financial penalties and payments to compel compliance.
Key facts
- Ju proposed penalties of about 1% of total revenue for refusing investigations. [ 1 , 2 , 5 ]
- He said the commission did not need compulsory investigative powers at present. [ 1 , 5 ]
- He called for legal amendments allowing stronger penalties for obstruction under the large-scale retail law. [ 1 , 4 ]
- Ju said allegations of information leaking to Hanwha were under internal inspection and not yet confirmed. [ 5 , 10 ]
Confirmed by several sources
Still unclear
- Whether investigation information was leaked to Hanwha. Ju said the allegation had not been confirmed and an internal inspection was underway.