In the Era of ₩2 Trillion Penalties, the FTC Must Fully Reassess Its Anti-Business, Sanctions-First Stance

From January to August of this year, the Korea Fair Trade Commission imposed fines totaling KRW 2.4576 trillion in bid-rigging cases, more than nine times last year’s annual total of KRW 263.6 billion. As fines have surged, the effectiveness of these sanctions must also be examined.

During this year’s parliamentary audit, controversy also arose over the KFTC chair’s past remarks about large corporations, raising questions about his view of business. Strictly judging illegal corporate conduct is one thing; viewing businesses themselves negatively is another. If the KFTC, which should serve as the market’s referee, reveals preconceived bias against particular business groups, even legitimate law enforcement may be perceived as “beating up on businesses.”

Questions also remain about the effectiveness of sanctions. According to audit materials, from 2020 through August of this year, 65 companies were involved in three or more separate bid-rigging cases. The number of detected violations alone cannot determine whether repeat offenses occurred after sanctions were imposed, but it is still necessary to separately verify how much higher fines have actually contributed to preventing violations and recurrences.

The structure used to calculate fines should be examined first. Under the current system, fines are generally calculated by multiplying the base rate by sales related to the violation, so the amount does not necessarily match actual illicit gains or consumer harm. In bid-rigging cases in particular, the contract amount may be used as the basis, making it an issue whether each participating firm’s role and actual profit are faithfully reflected in the fine.

In April, the KFTC revised its fine notification and raised the lower bound of the base rate for less serious collusion from 0.5 percent of related sales to 10 percent. There is no disagreement with the principle that more serious violations should face heavier sanctions. However, if even minor violations are bound by a high minimum rate, there is less room to reflect differences from case to case. Before raising the rate, the scope of related sales and the method of calculating harm and illicit gains should first be refined more precisely.

There is also the problem of overlapping sanctions taking multiple forms. A single violation may be subject simultaneously to fines, corrective orders, and criminal proceedings. The fact that their legal character differs does not mean the burden borne by a business is separate in practical terms. The reasons each measure is necessary should be made clear, and adjustments are needed to prevent overlapping investigations by multiple agencies or sanctions that are excessive in substance.

Caution is also needed in expanding ex ante regulation of new industries such as platforms. If business models or transaction terms are uniformly restricted before concrete anticompetitive effects have been confirmed, this could block not only new services but also the entry of latecomer firms. Ex post review that individually examines market power and consumer harm should be the rule.

There are also ways to make use of companies’ voluntary compliance efforts. Incentives should be designed so that preventive mechanisms such as Fair Trade Compliance Programs (CP), internal reporting, and improvements in trading practices actually work in the field. Deliberate collusion should be dealt with strictly, but there is no reason to impose uniformly harsh sanctions even on firms that quickly correct minor violations.

Recovery of harm should not be confused with the payment of fines. Fines go into the national treasury, but that does not mean the losses of trading partners and consumers are correspondingly compensated. Civil remedies such as damages claims and dispute mediation should therefore be made easier to use. In cases where harm can be resolved early, there is substantial practical benefit in actively utilizing voluntary settlement and corrective action by the parties.

What the KFTC should demonstrate is not a determination to impose harsh sanctions, but consistent standards and clear policy results. It should increase the proportionality of fine calculations and reduce overlapping regulation and ex ante intervention, while allocating policy tools toward voluntary compliance and meaningful recovery of harm. It must return to being not an agency that pressures businesses, but one that ensures competition works properly in the market.

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Original title: 과징금 2조 시대, 공정위의 기업관·제재일변 기조 전면 재검토해야

Author: Gwang yong Go

Date: 2026-10-29

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&pn=1&idx=29693