[Editorial] All-Purpose Reliance on Surcharges Can Produce Neither Fairness Nor Innovation

We express concern over the Fair Trade Commission’s (hereinafter the FTC) recently announced plan to substantially strengthen the upper limit on administrative fines. This approach carries the risk of reducing fair trade policy to an “administratively convenient punitive system.”

Under the justification of shifting from criminal punishment-centered regulation to economically centered sanctions, the FTC announced that it would raise the upper limit on administrative fines for abuses of market-dominant position, collusion, unfair trade practices, violations of labeling and advertising rules, and similar conduct to as much as 20–30% of sales.

Strengthening administrative fines may lead not to “deterrence” but to “contraction.” The FTC presents as its core rationale for raising fines the claim that “sanctions are weaker than the profits gained from unfair practices.” However, this is based on the dangerous premise of generalizing all violations as intentional and exploitative acts.

This is especially true in the digital and platform industries, where market boundaries are unclear and change occurs rapidly. Applying high-rate administrative fines based on sales in such sectors could result in innovative conduct itself being judged unlawful through ex post assessments. Before deterring unlawful conduct, this is far more likely to excessively increase firms’ regulatory risk burden and send a policy signal that discourages even ordinary investment and attempts to launch new businesses.

The claim that this reflects “advanced-country standards” omits important context. The FTC refers to the EU and the United States to emphasize the legitimacy of raising administrative fines, but this is closer to selectively extracting only part of those systems and making a simplistic comparison.

The EU and the United States have high levels of judicial oversight, transparent processes for calculating administrative fines, and systems in which ex post litigation and damages remedies function substantively. By contrast, in Korea, administrative agencies enjoy broad discretion, the criteria for calculating fines are also abstract, and judicial checks on commission decisions are likewise insufficient. In such an institutional environment, raising only the upper limit on administrative fines to the level of advanced countries is closer not to advanced regulation but to “high-risk regulation.”

Reducing criminal punishment while increasing administrative fines is another name for “concentration of power.” The FTC says that because criminal punishment is not being effectively utilized, it will reduce or abolish criminal penalties and sharply strengthen administrative fines. In reality, however, this produces the result of replacing areas that should be judged by the judiciary with internal sanctions imposed by an administrative agency.

Expanding administrative fines on the grounds of non-cooperation with investigations and repeated violations excessively enlarges the FTC’s authority. If this is coupled with an increase in the upper limit for fixed-amount fines, investigatory, adjudicatory, and sanctioning powers will inevitably be concentrated in a single institution. The burden of this directly undermines corporate predictability and legal stability.

The problem is the method. A fair market operates on the basis of clear and predictable rules, minimization of ex ante regulation, proportionality and transparency in ex post sanctions, and a balance that respects both innovation and competition. The FTC’s current stance, which presents raising administrative fines as though it were a cure-all, risks tilting the “playing field” in another direction rather than correcting an “uneven playing field.”

Before discussing an increase in the upper limit on administrative fines, clearer calculation standards and mechanisms to control discretion must first be put in place. What is required includes a clear presentation of innovation-friendly competition policy principles for the digital and platform sectors, and in that process, the presentation of empirical verification regarding market efficiency and consumer welfare rather than the abstract concept of “deterrence.”

Simply raising administrative fines does not automatically deliver fairness. Strong regulation is easy to create, but trusted regulation is difficult. We hope for a redesign in the direction of promoting free and fair market competition, rather than strengthening punishment-centered administrative power.

2026. 1. 8.

Center for Free Enterprise (CFE)

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Original title: [논평] 과징금 만능주의로는 공정도, 혁신도 만들 수 없다

Author: Center for Free Enterprise (CFE)

Date: 2026-01-08

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=comment&pn=1&idx=28470