Below is an update on a recent proposed amendment to the Korean Telecommunications Business Act (the “TBA”) and its practical implications for telecommunications service businesses.  In short, the amendment broadens the range of measures that Korea Communications Commission (the “Commission”) can take with respect to service providers under its investigation.  Specifically, the amendment allows the Commission (i) to adopt a consent decree when appropriate, (ii) to re-issue a request for information (“RFI”) upon the service provider’s failure to comply with an initial RFI, and (iii) to impose so-called “enforcement fine” upon the service provider for failure to comply with the Commission’s re-issued RFI.  The enforcement fine in particular will have significant impact on the service providers’ practice with respect to the Commission’s investigation.  The amendment was submitted to the National Assembly on July 7, 2020 and will need close monitoring going forward.  Please see below for further details.  

1.   Consent decree (proposed addition of Article 51-3 to the TBA)

• Under the proposed amendment, the Commission can adopt a consent decree.  A service provider under the Commission’s pending investigation may apply for a consent decree in an effort to voluntarily resolve the issue of unfair competition and infringement of user rights allegedly caused by the service provider’s conduct and to promote user protection.  Then, the Commission can stay its investigation and adopt a consent decree in efforts to achieve above-stated goals by the corrective measures. 

• The consent decree, however, may be revoked by the Commission in the event that (i) there was a material change to the circumstances that had served as a ground for the Commission’s approval of the consent decree and thus the corrective measures to be implemented pursuant to the consent decree became no longer appropriate, or (ii) the applicant for the consent decree failed to comply with its obligations prescribed under the consent decree without just cause.  

• The proposed consent decree is analogous to the Korea Fair Trade Commission’s consent decree system as prescribed under the Monopoly Regulation and Fair Trade Act (Article 51-2).   

2.   Enforcement fine to be imposed on a failure to comply with re-issued RFIs (proposed addition of Article 51-2 to the TBA)

• The Commission has been able to issue an RFI against a service provider under its investigation to further examine whether the service provider engaged in any prohibited conduct.  Under the proposed amendment, the Commission will be able to re-issue another RFI if the service provider fails to comply with the initial RFI.  

• In addition, in the event that the service provider fails to comply with the re-issued RFI, the Commission can impose a fine for such failure.  The enforcement fine will be imposed on a per-day basis, subject to a daily cap of 0.3% of the service provider’s revenue.  Particulars of the “revenue” that will serve as a base amount for this 0.3% cap will be set forth under the Presidential Decree.  

• As a result, service providers’ burden in responding to the Commission’s RFIs will significantly increase under the amended TBA.  

Although further details remain to be determined during the subsequent legislative process, we believe the proposed amendment may have significant practical implications for telecommunications service providers.  Especially the idea of imposing the enforcement fine on a daily basis for failure to comply with the re-issued RFI will affect the businesses’ practice in responding to the agency’s factual investigation.  Thus, it will be important for the service providers to closely monitor the legislative developments on these proposed amendments.

[Korean version]