On February 8, 2024, the Korea Fair Trade Commission (the “KFTC”) announced its key initiatives for 2024, which aim to “establish a fair market economy that promotes consumers’ livelihood and innovation” (the “2024 Plan”). The 2024 Plan sets forth the following key tasks: (i) establishing fair trade order to promote a dynamic economy, (ii) building a stable business environment for small and medium-sized enterprises (“SMEs”) and small business owners, (iii) creating an environment that ensures consumer rights, and (iv) improving the large corporate group regulation system.
With respect to task (i) establishing fair trade order, the KFTC has announced plans to pursue the enactment of the “Platform Fair Competition Promotion Act.” These plans are influenced by the emergence of limitations in existing fair trade policies due to the rapid growth of the digital economy. Moreover, the KFTC announced that it plans to investigate “core areas” of concern for competition authorities, including (a) collusion in the food, finance, telecommunications, and intermediate goods sectors, as well as (b) unfair trade practices in the semiconductor and medical device markets.
Regarding task (ii), which entails establishing a stable business environment for SMEs and small business owners, the KFTC plans to focus on reviewing the following:
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Reviewing industry practice: Inspect for unfair trade practices in the construction and software sectors, monitor for illegal activities in the implementation of the “variable supply price system,” and review technology misappropriations in automotive parts/industrial materials sectors and unfair terms and conditions in the webtoon and web novel sectors.
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Improving the business environment for small business owners: Pursue measures to eradicate franchisors’ unfair trade practices involving the forced purchase of items, carry out inspections of franchisors in industries such as the restaurant industry, where concerns about unfair profit-taking are significant.
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Reviewing unfair trade practices affecting suppliers and distributors.
In light of such active enforcement with respect to unfair trade practices in various aspects, companies are advised to conduct regular checks while carrying out business activities to minimize the risk of violations.
Furthermore, the KFTC plans to amend relevant regulations to designate the practice of reducing product volume without consumer notice, known as “shrinkflation,” as an unfair act. The KFTC also aims to enhance consumer-friendly payment methods such as mobile gift cards and prevent consumer harm caused by new types of transactions involving dark patterns or online specialty malls. These measures aim to create an environment that safeguards consumer rights in response to economic slowdowns and the growth of the digital economy, task (iii). Consequently, platform operators’ responsibility in relation to consumers’ usage of their platforms is expected to be strengthened.
Finally, in relation to task (iv) improving the large corporate group regulation system, there is a significant focus on addressing unfair intragroup transactions carried out by large corporations. As part of this effort, stringent measures are planned to tackle unfair intragroup transactions within certain industries that are closely linked to consumers’ livelihoods, such as the food and beverages, pharmaceuticals, and clothing industries. Additionally, measures will be developed to regulate activities involving the inappropriate use of derivative products, such as total return swaps (“TRS”), as financial guarantees. These initiatives will consider input from the market, relevant ministries, and academia, in response to evolving economic conditions. Furthermore, they will involve adjusting the relevant criteria for designating conglomerates that are subject to disclosure requirements, establishing the criteria for determining the concept of “same person” (i.e., individuals with de facto control over a corporation), and improving restrictions on voting rights for financial companies.
Due to factors such as high inflation and the economic slowdown, as well as the limitations in existing fair trade policies, it is expected that the KFTC will engage in active investigations in a number of fields, including the areas referred to in the 2024 Plan, which could also result in various disputes. Therefore, it would be important to carefully assess compliance with relevant laws and regulations and have a detailed understanding of the recently introduced or amended regulations and systems when carrying out business activities.
Please refer to the attached document (Link) for more details regarding the KFTC’s 2024 Plan.
