On December 9, 2020, the National Assembly passed a bill to completely amend the Monopoly Regulation and Fair Trade Law (the "FTL"). The Korea Fair Trade Commission (the "KFTC") originally submitted the amendment bill to the National Assembly on August 31, 2020. The bill that was eventually passed by the National Assembly is very close to the original bill, but with two major changes: (i) retention of the KFTC's exclusive right to file a criminal complaint in hardcore cartel cases and (ii) permission for holding companies to own corporate venture capital companies ("CVC"). Other than these two changes, the final bill passed by the National Assembly is largely similar to the KFTC's original bill. For more details on the changes to Korea's antitrust law to be brought by the amendment, please refer to our previous newsletter.
1. Details of Changes from Original Bill
(1) Retention of the KFTC's Exclusive Right to File a Criminal Complaint in Hardcore Cartel Cases
Under the previous FTL, the Prosecutors' Office could bring an indictment in FTL cases only if the KFTC had filed a criminal complaint with the Prosecutors' Office. The Prosecutors' Office did have a right to request the KFTC to file a criminal complaint, and the KFTC was obliged to comply with such request, but in any case, the Prosecutors' Office still needed the KFTC's criminal complaint to proceed with an indictment. The KFTC's original amendment bill sought to abolish its own exclusive right to file criminal complaints in hardcore cartel cases, such as price fixing and bid-rigging cases, so that the Prosecutors' Office would have been able to bring independent indictments in those cases even without the KFTC's criminal complaint.
In the course of reviewing the amendment bill, the abolition of the KFTC's exclusive right to file criminal complaints was supported by those who thought that given the severity of anti-competitive effect created by hardcore cartels, the Prosecutors' Office should be empowered to utilize its law enforcement power to the fullest extent against the participants. On the other hand, others believed that this abolition should be reconsidered because it could lead to too many third parties filing complaints with the Prosecutors' Office for alleged cartels and too many cases of companies being investigated by both the KFTC and the Prosecutors' Office.
In the end, the legislators decided that the KFTC should retain its exclusive right to file criminal complaints even in hardcore cartel cases, and no change was made to the FTL in relation to the KFTC's exclusive right through the amendment.
(2) Permission for Holding Companies to Own CVCs
The question of whether ordinary holding companies (i.e., non-financial holding companies) should be able to own CVCs was not addressed in the KFTC's original amendment bill, but there were other legislator-sponsored FTL amendment bills dealing with this issue. During the National Assembly's review process, these pending bills were consolidated, and the amended FTL will allow non-financial holding companies to own up to 100% of CVCs. To avoid the possibility that the CVCs owned by non-financial holding companies may be misused to further the concentration of economic power or undue transfer of wealth, the CVCs will be subjected to certain restrictions on its investment activities, scope of permitted businesses, and fund management reporting requirement.
2. Effective Date of Amendment
The amended FTL will become effective one year after the promulgation by the President, with certain limited exceptions. Although it is not yet known when the President will officially promulgate the amended FTL, we expect the amended FTL will take effect in January 2022.
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