Firms from other regions will find it easier to enter local household waste collection and transport markets that have long been dominated by a handful of local operators. The volume of ethanol that liquor makers can buy directly will increase fivefold, and small and mid-sized accounting firms with high audit quality will gain the chance to audit large companies.
The Fair Trade Commission announced these measures on the 25th as part of its "Plan to Improve Competition-Limiting Regulations for the First Half of 2026." The plan centers on revising six regulations to lower entry barriers in markets that have hardened around incumbent operators and to promote competition.
The most notable change involves the household waste collection and transport market. Currently, firms seeking to collect and transport household waste must obtain a permit from the relevant city, county or district. Local governments then hold competitive bidding among permitted firms to select operators to handle waste collection and transport.
But even when firms from other regions have tried to enter, obtaining a permit has been difficult due to reasons such as caps on the number of operators within a jurisdiction. In effect, this has perpetuated a structure in which a few incumbent firms operating in a given region divide up the market among themselves. As a result, even when competitive bidding was held, few firms took part, making genuine competition difficult and making it easy for incumbents to rig bids.
Under the new system, when a firm already licensed for household waste collection and transport in one region applies for a permit in another city, county or district to expand its service area, the permit will in principle be granted unless there is a specific problem. For example, if a firm licensed in City A seeks to enter City B's waste collection and transport market, City B will have a wider path to granting a permit. The FTC expects that more entry by outside firms will increase the number of bidders and intensify competition among incumbents. It hopes this will also raise the quality of waste-processing services.
The ethanol distribution market will also see expanded competition. Ethanol is a high-purity alcohol used as a main ingredient in soju. Currently, direct purchases by liquor makers from ethanol producers account for only about 2% of total ethanol sales. The remaining 98% flows through wholesalers, which buy ethanol from producers and resell it to liquor makers. Because direct transactions were limited, liquor makers found it difficult to choose and deal directly with a preferred producer among several, and competition among ethanol producers was insufficient.
Accordingly, the FTC decided to expand the volume eligible for direct transactions between liquor makers and ethanol producers from 2% to 10% of total ethanol sales starting in 2027, a fivefold increase. As liquor makers gain more options to deal directly, competition among ethanol producers on price and quality is expected to intensify further. The FTC also plans to consider additional increases to the permitted volume after assessing the impact on market competition and grain supply.
In the audit market, small and mid-sized accounting firms will be given broader opportunities to audit large companies. Currently, financial authorities divide accounting firms into four groups by size and set different limits on the size of companies each group may audit.
However, in 2022, the threshold for companies that only large accounting firms may audit was lowered from 5 trillion won or more in assets to 2 trillion won or more, narrowing the range of companies that small and mid-sized firms could audit. The concentration of audit work at large firms also worsened.
Going forward, the FTC will introduce a "group upgrade exception" that allows only Group B and Group C accounting firms with high audit quality to audit large companies otherwise reserved for firms one tier higher. The aim is to give firms with high audit quality the chance to audit larger companies while encouraging the firms themselves to improve their audit quality.
The barrier for accounting firms expanding into regional areas will also be lowered. Currently, to open a branch office in a regional area, a firm must have at least three certified public accountants working full-time at that office. Because accountants are hard to find outside major cities, meeting this requirement has been difficult. The full-time CPA requirement for branch offices will therefore be eased from at least three to at least one. As more accounting-firm branches open in regional areas, audit-firm choices for regional companies are also expected to expand.
An FTC official said, "In the second half of the year as well, we plan to identify additional regulations that block market entry or restrict business activity and continue improvement talks with the relevant ministries."
