On October 22, 2019, the Korea Fair Trade Commission ("KFTC"), in an ongoing effort to improve the effectiveness of internal antitrust compliance programs ("CPs") of companies, promulgated the amended Guidelines on Operation of CPs and Provision of Incentives (the "Amended Guidelines"), which had originally been announced in August. Among the changes, the Amended Guidelines (i) lift the previous restrictions that prevented companies with a past history of antitrust violation from applying for a CP evaluation; (ii) exempt companies with the highest CP rating from the KFTC's order to publish the fact that they received the KFTC's sanction, if such companies becomes subject to the KFTC's investigation and sanction; and (iii) revise the requirements for adopting CPs. The Amended Guidelines took effect immediately and will be applicable to the upcoming CP rating evaluations in 2020.
Over the years, the KFTC has taken various administrative and legislative measures to encourage companies to adopt CPs. In fact, the amendment bill for the comprehensive overhaul of the Monopoly Regulation and Fair Trade Law ("FTL"), currently pending before the National Assembly provides for a legal basis for providing rewards and support for establishing and implementing CPs. In order to reinforce your risk management capability and competitiveness, we encourage companies to carefully review the details of the Amended Guidelines, summarized below, and make sure that the changes are reflected in the operation of your current or future CPs. The KFTC is also preparing a separate amendment to its Guidelines on CP Rating Evaluation, which will reflect the changed content in the Amended Guidelines.
Amendment |
Details |
(1) Requirements for Adopting CPs |
- Change requirements to encourage companies to establish a ground for adopting a CP and continue to effectively operate the CP after the adoption
- (new) requirements for preparation and enforcement of CP-related criteria and procedures, evaluation of a CP's effectiveness, improvement measures
- (deleted) requirement to maintain a document management system
- (revised) CEO's determination and support for compliance, appointment of CP managers, requirements for publishing and utilizing compliance manuals, conducting compliance training sessions, building internal monitoring systems, and taking disciplinary measures against executives and employees who engage in antitrust violations
- Specify that the required compliance training must be provided to the company's CEO and executives/employees in departments with a higher risk of antitrust violations
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(2) CP Rating System |
- Remove restrictions that prevented companies with a past history of antitrust violation from applying for a CP rating evaluation
- Enable all companies, regardless of their past antitrust violations, to apply for the CP ratings assessment
- Violation records will be considered in the ratings evaluation so that companies with clean records are not relatively disadvantaged
- Update the current evaluation process and rating system
- Simplify the evaluation process from three to two steps and in case of on-site evaluation, add on-site interviews with companies' CP manager as part of the evaluation process
- Establish a more reasonable evaluation system by reducing the number of rating categories from eight to six
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(3) Incentives for Companies with Excellent CP Ratings |
- Exempt companies with the highest rating (AAA) from the order to publish the fact that they were subject to the KFTC's corrective order as one of the KFTC's sanction for future antitrust violation, and remove exceptions to this exemption
- Provide special incentives for companies with the highest CP rating
- Introduce a reward program for companies that receive a CP rating of AA or higher for two consecutive years
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