Companies in energy, pharmaceuticals, transportation and other sectors closely tied to daily life will be forced out of the market if they are caught repeatedly engaging in cartel conduct. The leniency program, which reduces penalties for firms that voluntarily report collusion, will also be revised so that active remedies such as price-redetermination orders apply without exception.
The Fair Trade Commission and the Democratic Party of Korea announced the "legislative plan to eradicate repeat cartels" at a party-government consultative meeting held at the National Assembly on the 28th.
The government and the ruling party will first revise the Fair Trade Act to introduce registration revocation and business suspension sanctions for 17 industries, including firefighting equipment, pharmaceutical manufacturing and imports, high-pressure gas production, electrical construction, petroleum refining and import-export sales, waste treatment, and passenger and freight transportation. The revision will create grounds for the FTC to request that relevant ministries revoke registrations or suspend operations when a business in those industries engages in collusion twice or more within five years. Currently, construction firms and licensed real estate agents face registration revocation under the Framework Act on the Construction Industry and the Licensed Real Estate Agents Act, respectively, if they are caught colluding twice within a set period.
The statute of limitations for cartel sanctions will be extended to 15 years from a maximum of 12 years. Under current rules, an investigation must begin within seven years after collusion ends; that window will be extended to 10 years, with an additional period of up to five years allowed for sanctions after an investigation begins. The change is intended to allow authorities to track covert collusion over a longer period.
Price-redetermination orders will also be written explicitly into the Fair Trade Act. At present, they rest on broad remedial provisions and review guidelines, leaving unclear how far companies must go in complying. Going forward, the law will directly require prices to be reset to "a level that restores pre-collusion competition." The government also plans to strengthen detection tools by adding provincial education offices to the list of bodies required to submit and cooperate on bidding information, allowing procurement data to be linked reliably with the Bid Rigging Indicator Analysis System, or BRIAS.
Companies that receive leniency by reporting their own collusion will not be exempt. The FTC plans to count cartels covered by leniency toward the tally of repeat offenses. Reductions in fines and criminal referrals for self-reporting firms will be maintained, but the previously granted exemption from remedial measures will be eliminated. That means a company will face the same remedies as other participants even if its fine is reduced, and if it is sanctioned for collusion again within five years, it could become subject to a request for business suspension or registration revocation.
The FTC has rolled out a series of tough sanctions since the Lee Jae-myung administration took office. After pushing in December last year to raise the cap on cartel fines to 30% of related sales from 20%, it has imposed fines running into hundreds of billions of won on a string of major cases this year. The commission levied 272 billion won on four major banks for exchanging information on mortgage loan-to-value ratios, 408.3 billion won on three sugar makers, 338.3 billion won on six paper companies, 671 billion won on seven flour millers and 747.6 billion won on four starch and starch-sugar producers. The five major cases alone account for 2.4372 trillion won in fines.
Fines have also grown heavier. In April, the commission raised the floor for the cartel fine assessment rate to 10% from 0.5% and widened the maximum aggravation for repeat violations to 100%. For collusion, fines can be increased by up to 100% if a company has received even one order to pay a fine over the previous 10 years.
Measures that go beyond monetary penalties to directly reshape corporate business structures are also in the works. The FTC is pursuing a Fair Trade Act revision that would let it order "structural remedies" such as share divestitures or business transfers when abuse of market dominance or collusion has entrenched a structure that restricts competition.
Business groups have voiced concern that the regulatory compliance burden could grow excessive. They argue in particular that measures that are hard to reverse, such as selling off shares or business divisions, directly affect corporate ownership and business structures, and that the conditions and procedures for applying them should therefore be set strictly.
"It is difficult to argue against the policy goal of fair competition, but from companies' point of view there are parts that can feel unfair or excessive," a senior business group official said. "Imposing sanctions that are hard to recover from, in particular, should be reviewed with caution."
