On October 22, 2019, the Korea Fair Trade Commission (“KFTC”), in an ongoing effort to improve the effectiveness of internal antitrust compliance programs (“CPs”), promulgated the amended Guidelines on the Operation of CPs and Provisions of Incentives (the “Amended Guidelines”), which had originally been announced in August 2019.  Among the changes, the Amended Guidelines (i) eliminate previous restrictions that prevented companies with a past history of antitrust violations from applying for a CP evaluation; (ii) exempt companies with the highest CP rating from the requirement to publish the fact that they received a corrective order from the KFTC; 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.

The purpose of the Amended Guidelines is to improve inadequacies in the current operation of CPs and promote the operation and adoption of CPs.  Further, the KFTC expects the Amended Guidelines, which provide special incentives for companies with superior CP ratings, to encourage companies to adopt and operate CPs.

Summary of the Amended Guidelines

1.    Requirements for adopting CPs

The below describes certain amendments related to the adoption of a CP:

• Added: requirements for the preparation and enforcement of CPs, evaluations of a CP’s effectiveness and improvement measures
• Deleted: requirement to maintain a document management system
• Revised: CEO’s commitment and support for compliance, appointment of CP managers, requirements for publishing and utilizing compliance manuals, compliance training sessions, internal monitoring systems, and taking disciplinary measures against executives and employees who engage in antitrust violations

Further, the KFTC specified that compliance training must be provided to the company’s CEO and executives and employees in departments with a higher risk of antitrust violations.

2.    CP rating system

The KFTC removed restrictions that prevented companies with a past history of antitrust violations from applying for a CP rating evaluation by the KFTC.  However, past violations will be considered in the ratings evaluation so that companies with clean records are not relatively disadvantaged.

Further, the KFTC updated its current evaluation process and rating system by simplifying the evaluation process from three steps to two steps and with respect to on-site evaluations, adding interviews with CP managers as part of the evaluation process.  In addition, it also simplified the evaluation system by reducing the number of rating categories from eight to six.

3.    Incentives for companies with top CP ratings

The KFTC added an exemption for companies with the highest rating (AAA) from the requirement to publish the fact that they were subject to a KFTC corrective order and expanded a basis for mitigation of such publication requirement.  Further, the KFTC introduced a reward program for companies that receive a CP rating of AA or higher for two consecutive years.

Implication

The Amended Guidelines are a continuation of the KFTC’s efforts to take 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 new rewards and support for establishing and implementing CPs. The KFTC is also preparing a separate amendment to another related guidelines, Guidelines on CP Rating Evaluations, which will reflect the changed content in the Amended Guidelines. We encourage companies to carefully review the details of the Amended Guidelines and make sure that the changes are reflected in the operation of their current or future CPs.