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Newsletter | May 2014, Issue 2 |
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ANTITRUST & COMPETITION |
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The KFTC's Announcement of Amendment to Detailed Guideline for Calculation of Administrative Fine |
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On February 12, 2014, the Korea Fair Trade Commission ("KFTC") announced an amendment ("Amendment") to the Detailed Guideline for Calculation of Administrative Fine ("Guideline"). The Amendment will become effective as of August 19, 2014; for conduct completed prior to the effective date of the Amendment, the previous Guideline will apply. The key features of the Amendment are as follows: |
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Scope of Aggravation |
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The Amendment broadens the scope of aggravation for repeat violations of the Monopoly Regulation and Fair Trade Law (“FTL”) under the current Guideline by adjusting the relevant threshold from "more than three violations within three years, or five or more aggregate penalty points" to "more than two violations within three years, or three or more aggregated penalty points." |
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Scope of Mitigation |
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First, for a mere participant that violated the FTL, the ceiling for mitigation has been reduced from 30% to 20%. Unless the violator was forced to participate due to deception or duress, the maximum mitigation percentage of 30% will continue to apply. |
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With respect to mitigation for cooperating with an investigation, the ceiling for such mitigation has been reduced from 15% to 10%, if the cooperator begins cooperating with the investigation after an examiner's report has been issued. |
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The Amendment abolishes mitigation which used to be granted to companies that received best practices recognition for their participation in the KFTC's voluntary compliance program. However, a separate mitigation factor (up to 10% mitigation) has been introduced for cases in which the violation occurs due to unforeseeable reasons despite the implementation of self-compliance measures. |
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With respect to mitigation for voluntary correction, the definition of the term "voluntary correction" has been narrowed down to "acts of actively rectifying the effects of the violation beyond mere suspension of the conduct in violation of the FTL." In particular, the limit for this type of mitigation has been reduced from 30% to 10% for cases in which the violator has failed to remove the effects of its violation despite its efforts to rectify. |
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Under the amended standards, if the violator objectively proves that it has been incapable of maintaining its business for reasons such as impaired capital (i.e., total liabilities exceeding total assets), the administrative fine may be mitigated by up to 50%. However, if the financial difficulty is merely an "anticipated difficulty," no mitigation may be granted. Also, the Amendment strikes out the section of the current Guideline, which allows the KFTC to grant more than 50% in mitigation, if the weighted average of the net income for the past three years is in the negative. |
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