On January 26, 2023, the Korea Fair Trade Commission (“KFTC”) announced its 2023 Enforcement Plan (“2023 Plan”). The enforcement plans, published annually by the KFTC, present a comprehensive overview of the KFTC’s enforcement priorities for the year ahead.
The 2023 Plan presents the KFTC’s roadmap to achieve its goal for the year under the slogan, “Fair Market Economy with Upright Principles,” and sets out the following as central tasks: (i) create a market environment that promotes innovative competition, (ii) strengthen the basis for a fair transaction of small and medium-sized enterprises (“SMEs”) and small business owners, (iii) rationalize the operation of a large conglomerates system, and (iv) foster a transactional environment that guarantees consumer rights. In particular, in line with the new government’s policy stance, the KFTC has specifically expressed as its enforcement directive that it will be committed to establishing a clear and reasonable law enforcement system that gains the trust of the public and the market as the basis for the above initiatives.
In light of the accelerating paradigm shift toward a digital economy, the 2023 Plan emphasizes that certain items must be the focus of inspection to promote innovation in the digital economy, such as digital infrastructure and platforms of semiconductors. To this end, the 2023 Plan places monopoly regulation, merger review and cartel investigations at the forefront, which are traditional areas of enforcement by competition authorities.
The KFTC’s initiative of (ii) strengthening the basis for a fair transaction for SMEs and small business owners is in consideration of the curb on economic recovery that has led to continued economic difficulties for businesses and the general populace. The 2023 Plan mentions the monitoring of unfair trade practices and improving regulations in sectors that are closely related to the everyday lives of the general populace, such as content, software, leisure, health, travel, and lodging. Since it is expected that the KFTC will actively continue to regulate unfair trade practices, companies and businesses should take caution to minimize the risk of violations even in the ordinary course of business by conducting regular compliance inspections in advance.
With respect to the regulation of large conglomerates, the KFTC continues to regard unfair intragroup transactions as a central subject of law enforcement. Accordingly, the 2023 Plan states that measures will be taken to (a) intensively monitor allegations of legal violations, (b) inspect circumvent arrangements involving intragroup transactions, such as total return swaps (“TRS”) and cash deficiency support agreements, and (c) adjust regulatory standards to enhance transparency and predictability. The foregoing will be pursued along with the aim to improve the regulation of large conglomerates, such as establishing standards for designation of the “same person,” making improvements in the disclosure system, and establishing and operating a business group policy network—all of which would take into account voices in the market and opinions from relevant ministries and academia in light of the changing economic conditions.
Also noteworthy is that the KFTC has expressed its willingness to meet public demand for fairness in the law enforcement process by improving measures to guarantee procedural rights in the KFTC’s investigation and deliberation process, and strengthening its internal capabilities and undergoing structural reorganization to support such measures. It is expected that the procedural rights of respondent companies will be reinforced and case handling more efficient and transparent through the implementation of various procedural devices and systems.
For a more detailed summary of the 2023 Plan and its implications, please refer to the following attachment (Link).
This content is also available in Kim & Chang’s Korea Legal Insight 2023(link), where you can find out more updates and outlooks on Korea’s legal developments in 2023.