On November 19, 2019, the Korea Fair Trade Commission (the “KFTC”) announced it was creating a task force that would investigate unfair trade practices in the information, communication and technology industry- ie ICT Industry. . Although the KFTC had established a task force team for the ICT industry in 2016, the team had been inactive since the decision against Qualcomm. The establishment of the new team is believed to reflect the determination of the KFTC’s new head- Chairwoman Joh. Since her appointment in September of 2019, Joh has continuously expressed interest in creating a fair trade environment in ICT areas.
Led by the Secretary-General of the KFTC, Mr. Chae Kyu-ha, the 15-member task force will take charge of investigations involving unfair trade practices and abuse of dominance in the ICT areas. The Economic Analysis Division and the International Cooperation Division will also closely cooperate with the new task force to react to the rapidly changing competition environment of the ICT industry.
The KFTC is expected to continue its push against unfair trade practices and abuse of dominance in the ICT areas. The task force's investigations may lead to changes in the KFTC’s enforcement guidelines.
For more information, please contact Lee & Ko's Antitrust Practice Group.
Leniency programs have been used quite successfully around the world to battle cartels. The same holds true in Korea. Since its introduction in 1997, Korea’s leniency program has become the most important and effective means of cartel discovery. Korea’s leniency program was updated in 2005 which improved predictability and reliability.
From 2005 to 2018, Korea’s antitrust regulator – the KFTC- applied fines in 557 cartel cases. Among those cases, 335 cartels were discovered using its Leniency Program. Or in other words, over 60 % of the cartel cases from 2005-20018 that resulted in fines were discovered because of the leniency guidelines.
What is leniency? Basically, it’s a system of partial or total exoneration from penalties that would otherwise be applicable to a cartel member which reports its cartel membership to a competition or antitrust enforcement regulator. It has been used quite effectively in the US, EU and other jurisdictions. Some jurisdictions, such as the EU uses the leniency program to offer a reduction in fines up to 100%.
Korea’s leniency program, is similar to the US and EU. Of course unlike the EU, which only levies administrative fines in the case of a cartel, the KFTC may refer a cartel case to the Prosecutor’s Office for criminal prosecution, which makes a leniency deal to avoid prosecution quite tempting for many cartel members.
For more information on the Leniency Regime in Korea, please contact me or the antitrust practice group of Lee & Ko.