On February 16, 2023, the Korea Fair Trade Commission (the “KFTC”) announced its “Plan to Improve the KFTC’s Law Enforcement System” (the “Plan”). The Plan consists of reorganization of the KFTC’s organizational structure, amendments to its case handling procedure, and enhancement of its case handling capabilities. The KFTC noted that the Plan reflected the instructions originally given during its report to the President in August 2022, based on its finding that its enforcement system could be further improved in line with global standards and that its investigation and deliberation procedures could be reinforced to ensure respondent companies’ rights and predictability.
As the KFTC plans to implement the Plan and complete the reorganization in the first half of this year, we advise paying close attention to the progress of the implementation of the Plan.
Revision of Case Handling Procedures and Standards
According to the Plan, the KFTC intends to revise its case handling procedures and standards to ensure transparent and swift handling of cases. In particular, the Plan includes the following action items: (i) clarification of investigation notices and inclusion of more details in investigation notices; (ii) developing a procedure for raising objections to the results of dawn raids; (iii) general prohibition on giving priority to the search of legal and compliance departments during dawn raids; and (iv) sufficient consultation with respondents and protection of respondents’ rights.
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Changes
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Details
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Inclusion of more details in investigation notices and placement of certain limitations during dawn raids
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Inclusion of more details in investigation notices: Notices will clearly state the category and type of transaction related to the alleged violation and the time period under investigation.
- For the transaction category, the scope must be limited to the sub-categories of the businesses of the respondent company subject to the investigation, out of all of the businesses of the respondent company.
- The investigation should be limited to the stated time period, but if the time period under investigation needs to be expanded, a separate official notice must be issued stating the expanded period under investigation and reasons for the expansion).
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Establishment of a process for the return of documents that were collected beyond the scope of an investigation notice: The KFTC will introduce a formal procedure for requesting the return of materials collected beyond the investigation scope specified in the official notice.
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Establishment of standards for investigating compliance and legal departments: Priority raids targeting the compliance or legal departments will be prohibited in principle, but strict searches will be conducted if necessary, such as when such departments are deemed to be directly involved in the violation of law or destruction of evidence.
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Reorganization of investigation and deliberation process
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Establishment of a preliminary opinion hearing process: The KFTC will introduce an official face-to-face meeting process between the respondent company and senior members of the case team during the investigation to clarify basic facts and issues.
- Such meeting will take place in cases that require clarification of basic underlying facts, complex cases involving multiple issues, or cases that are expected to go to the KFTC hearing.
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Expansion of number of hearings: Two or more hearings will take place for cases that meet certain thresholds (scale and nature of the case).
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Improvement of case inquiry system: The KFTC will reorganize the case inquiry system so that the respondents and complainants can easily check online details regarding the case handler and progress of the case.
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Establishment of a fast track system for certain types of cases
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Management of long-term cases: The KFTC will establish a special management system for long-pending cases and cases that are nearing the expiration of statute of limitations.
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Promotion of fast track cases: The KFTC will encourage early resolution of cases that require quick remedies or cases that can be resolved only through fact-finding because they have the nature of a dispute between the parties.
- The KFTC will promote alternative dispute resolution mechanisms (e.g., corporate compliance activities, dispute mediation, consent decrees) for cases requiring speedy relief.
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Internal Reorganization
In the Plan, the KFTC announced that it will divide its investigation section from the policy section to increase accountability and expertise of each function. The KFTC plans to complete the reorganization within the first half of this year.
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Change
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Details
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Division of the Secretariat into Policy Section and Investigation Section
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Strengthening of Separation of Investigation Function and Deliberation Function
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[Korean Version]
