Experts Call for Quality Over Quantity in Fair Trade Commission Actions

 Concerns are rising as the Fair Trade Commission (FTC) continues to strengthen regulations through expanded investigations, increased fines, and the disclosure of review reports, which are adding to the burden on businesses. Experts agree on the need for enhanced market surveillance by the FTC but emphasize that this should be accompanied by procedural controls and a predictable legal enforcement system that matches the expanded authority.

"Regulatory Shifts Based on Administration... Need to Alleviate Business Uncertainty"

According to a comprehensive report by Aju Economy on July 2, experts identified key issues surrounding the FTC's recent regulatory tightening, including policy changes based on the administration, increased burdens on businesses, improved precision in enforcement actions, and the direction of regulations for new industries.

Go Eun-hee, an attorney at Jeonghyang Law Firm, noted that "the enforcement direction of the FTC inevitably changes according to the policy orientation of the administration," adding that under governments emphasizing economic democratization, the FTC's authority has been relatively strengthened. She pointed out that while past issues focused on franchise abuses, recent attention has shifted toward stricter regulations and penalties for large corporations.

Baek Kwang-hyun, an attorney at Barun Law LLC, stated, "This is not just about strengthening sanctions; it represents a paradigm shift in law enforcement from 'post-response' to 'prevention.'" He acknowledged the clear intention to enhance market transparency and fairness but expressed concern that even minor compliance failures could lead to significant financial burdens for companies.

"Quality Over Quantity in Enforcement Actions... Need for Enhanced Procedural Controls"

As the FTC's authority expands, there are calls for strengthening procedural controls to ensure the fairness of investigations and reviews. While the number of fines imposed by the FTC has increased, there have been repeated instances of court cancellations of these actions or refunds of fines, indicating a need for more selective and focused enforcement.

From 2017 to August of last year, the FTC ordered companies to pay 624.7 billion won in fines and 47.4 billion won in refund interest due to court rulings. Even when fines are refunded, companies still bear the costs of litigation and management uncertainty, underscoring the demand for greater precision in enforcement actions.

In response, Go emphasized the need for internal checks that correspond to the expanded authority. He stated, "While the FTC has limitations in verifying facts, the impact of its actions can be devastating for businesses," urging for a balance between authority and control. He also suggested the introduction of an internal evaluation system similar to the prosecution's acquittal review system to reduce instances of court cancellations.

Ji Cheol-ho, former vice chairman of the FTC, echoed this sentiment, advocating for a more focused approach rather than indiscriminately expanding the scope of investigations. He argued that thoroughly investigating key cases would lead to more robust decisions that would withstand judicial scrutiny and effectively prevent similar violations.

Lee Hwang, a professor at Korea University’s Law School, offered a similar assessment. He noted that the FTC has long faced criticism for a lack of personnel and time relative to the number of cases, suggesting that with recent staffing increases, the focus should shift from increasing the number of investigations to enhancing the speed of case processing and the precision of review reports and decisions.

Baek also emphasized the importance of improving the objectivity of economic analysis, adherence to legal procedures, and the completeness of proving illegality, stating, "We need to enhance the 'quality' of enforcement actions rather than just the 'quantity.'"

However, Choi Seung-jae, a professor at Sejong University, called for a more nuanced approach. He remarked, "It is not appropriate to evaluate the FTC solely based on the likelihood of losing cases, as there are instances where actions may not be taken due to the risk of loss. Improvements should be made not only at the enforcement stage but also throughout the litigation process."

"Predictability is Key for New Industries Over Strict Regulations"

In sectors such as platforms and artificial intelligence (AI), creating an environment where companies can clearly predict regulatory standards is seen as a top priority.

Ji, the former vice chairman, emphasized a gradual approach by referencing the historical development of the Fair Trade Act. He stated, "Rather than imposing strict regulations from the outset on new industries, we should establish standards that allow companies to operate within the law progressively," noting that just as cartel fines have gradually increased from 1% to 30%, new industry regulations should also be adjusted gradually.

Baek argued that guidelines should serve to provide clear evaluation criteria rather than definitively determine legality. He explained, "Maximizing predictability rather than simply reducing regulatory intensity is the starting point for balancing regulation and innovation."

Lee warned against the risks of misjudging legality in new industries. He cautioned, "New industries often lack sufficient precedent, increasing the likelihood of misjudging illegality. If legitimate efficiency-seeking actions are wrongly deemed illegal, it could stifle corporate investment and innovation in new businesses, necessitating prompt and precise judgments based on adequate personnel and expertise."

Choi suggested that traditional enforcement of competition law may be insufficient for new industries, advocating for the FTC to bolster its personnel and resources to fulfill its fundamental role of promoting competition.