After more than six months of review, the KFTC Task Force issued its final recommendations for improving Korea’s competitive legal enforcement system. Recommendations covered three main areas: (i) Administrative Enforcement, (ii) Civil Enforcement, and (iii) Criminal Enforcement.
The Task Force announced in its interim report that it was looking at increasing monetary penalties. In the Final Report the Task Force reiterated its recommendation to double the surcharge rate. Therefore, in a cartel case, the maximum surcharge would increase from 10% of the volume of commerce to 20% of the volume of commerce. Administrative fines for “Act of Dominance” violations would increase from 3% to 6% and penalties for “Unfair Trade Practices” would increase from 2% to 4%.
In the area of civil enforcement, the Task Force had looked at a number of issues including individual / including increasing punitive damages (to up to treble damages), as well as the right to bring class actions. Though agreeing in principle to certain changes, the Task Force could not agree upon the scope of the recommendations.
Regarding the adoption of the right to private injunctive relief, the Task Force agreed in principle but could not agree upon the scope. Some members of the Task Force wanted the right to injunctive relief to apply only in the Unfair Practices area while others wanted it to be available in all cases involving antitrust violations.
Regarding damages, the Task Force agreed to recommendations allowing the introduction of punitive damages of up to three times (treble damages) but could not agree upon the scope.
In its Final Report, the Task Force looked at changing the current exclusive referral system, whereby the KFTC exercises the exclusive right to refer cases for prosecution to the Prosecutor’s Office. The Task Force agreed of abandoning the exclusive referral system should be abandoned. However, as some antitrust or competition violations require a competition analysis (including economic analysis) , the Task Force wants the maintain the KFTC’s exclusively refer cases for prosecution under the MRFTA to continue, while recommending that exclusive referral rights involving certain form based violations (violations of the Franchise Act, Subcontractor Act, etc.) be repealed.
Though the Task Force considered a number of minor issues regarding proposed changes to the current competition regime in Korea, the above mentioned recommendations reflect the major changes that have been considered. Though there was some agreement as to the direction of administrative, civil and criminal enforcement, differences of opinion still remain. Therefore, it will take longer to implement the proposed changes.
