1.

What You Need to Know

On August 27, 2026, the Korea Fair Trade Commission (the “KFTC”) pre-announced draft amendments to the Enforcement Decree of the Large Retail Business Act and to the surcharge imposition notice (the “Surcharge Notice”) governing administrative fines under that Act. The amendments restructure surcharge calculation into two steps to widen the circumstances in which a proportional (rate-based) surcharge applies, and they strengthen deterrence by raising the applicable rates and expanding the aggravation for repeat violations. Large retail businesses should expect their overall surcharge exposure to rise and should review the draft closely to prepare an appropriate response.
 

2.

Background

Under the current Large Retail Business Act and other statutes the KFTC administers, the surcharge regime treats a proportional surcharge, calculated in proportion to the scale of the violation, as the governing rule, and permits a fixed-sum surcharge only where the variables needed to calculate the proportional amount cannot be established. The KFTC’s review of Large Retail Business Act decisions over the past decade nonetheless found that a fixed-sum surcharge was imposed in a substantial share of cases, which prompted the need to fundamentally restructure the framework so that a proportional surcharge, reflecting specific circumstances of each case, can be imposed more often.

The KFTC has also already revised its surcharge notices in the first half of this year across the Monopoly Regulation and Fair Trade Act and the subcontracting, franchise, and agency sectors, focusing on higher surcharge floors and stronger aggravation for repeat violations. The Monopoly Regulation and Fair Trade Act surcharge notice has been in effect since April 30, 2026, and the subcontracting, franchise, and agency notices since August 4, 2026. The present amendments extend the same deterrence measures to the retail distribution sector to ensure consistency across these regimes.
 

3.

What the KFTC Proposed

The amendments make changes in five principal areas: the two-step restructuring of the surcharge framework, higher applicable rates and base amounts, stronger aggravation for repeat violations, narrower mitigation, and other conforming revisions.
 

(1)

Two-Step Surcharge Framework

The KFTC has structured the basis for calculating a proportional surcharge into two steps, using the violation amount and relevant supply payments. At the first step, the surcharge is calculated as before by multiplying the violation amount by the applicable rate. Where the violation amount cannot be defined or calculated, the KFTC will no longer move directly to a fixed-sum surcharge but will instead proceed to a second step, multiplying relevant supply payments by the applicable rate to derive a proportional surcharge. Only where neither the violation amount nor relevant supply payments can be calculated will a fixed-sum surcharge of up to KRW 500 million continue to apply.

To support this framework, the amendments add a definition of relevant supply payments (the total purchase price of goods, or an equivalent amount, bought from suppliers in connection with the violation during the violation period) and introduce the concept of average supply payments (the average annual purchase amount over the immediately preceding three fiscal years) as the ceiling reference for the proportional surcharge, together with related conforming revisions.
 

(2)

Higher Applicable Rates and Base Amounts

Responding to criticism that the applicable rates were set too low, so that even serious violations drew modest surcharges, the KFTC has raised both the applicable rates and the base amounts and has refined the gradation of seriousness from three tiers to four. This aligns the retail distribution regime with the subcontracting, franchise, and agency sectors. The rates and fixed-sum base amounts keyed to the violation amount are raised as follows.
 

(3)

Stronger Aggravation for Repeat Violations

To deter repeat violations, the KFTC has extended the look-back period for aggravation from the past three years to the past five years and has substantially raised the aggravation ceiling. Under the amendments, a single prior violation within the past five years, where the aggravation score for the number of violations is two points or higher, allows aggravation of up to 50 percent, and the surcharge may be aggravated by up to 100 percent as the number of violations increases.
 

(4)

Narrower Mitigation Grounds and Ranges

The KFTC has tightened the mitigation regime to narrow the reductions available to businesses. Previously, cooperation at the investigation stage and at the deliberation stage each allowed a reduction of up to 10 percent, for a combined maximum of 20 percent; under the amendments, a reduction of up to 10 percent is available only where the business cooperates across all stages from investigation through deliberation. The reduction for voluntary correction has likewise been narrowed from a former maximum of 50 percent to up to 10 percent, available only where the business substantially removes the effects of the violation.
 

(5)

Other Conforming Revisions

The KFTC has additionally introduced a standard for the administrative fine for obstruction of an investigation through written statements, which had been omitted from the Enforcement Decree of the Large Retail Business Act, to align it with the enforcement decrees of other statutes, and has reorganized the table of contents and structure of the Surcharge Notice to follow the calculation sequence used in other statutes (calculation basis, first adjustment, second adjustment, and final surcharge). It has also refined difficult statutory terms into plainer language and corrected drafting errors as part of a broader clean-up of the provision.
 

4.

Why This Matters

The amendments are expected to affect businesses subject to the Large Retail Business Act in several ways. First, matters that previously drew a fixed-sum surcharge of up to KRW 500 million because the violation amount could not be calculated may now attract a proportional surcharge based on relevant supply payments, so that surcharge exposure will rise sharply, particularly in matters involving larger transaction volumes. Because the higher rates and the finer gradation of seriousness take effect together, the surcharge level for the same violation is also expected to increase across the board.

Businesses with a history of prior corrective orders should pay particular attention, as aggravation for repeat violations now reaches up to 100 percent based on a five-year look-back, so that a future sanction may be aggravated significantly. The tighter mitigation requirements add to this exposure, since a business that does not cooperate across all stages of the investigation and deliberation and does not achieve genuine remediation cannot expect the level of reduction previously available.
 
Under the supplementary provisions of the amendments, the former rules continue to apply to violations that ended before the amendments take effect, while the revised standards may apply to violations that end after that date. Businesses should therefore review potential compliance exposure in their dealings with suppliers in advance and manage their history of prior violations together with the associated aggravation risk. Because the detailed basis for calculating relevant supply payments will become clearer through the forthcoming Enforcement Decree and notice, businesses should confirm the specifics of the draft during the pre-announcement period and consider submitting comments where appropriate.