The penalties for unfair trade practices in subcontracting, franchising, and dealership sectors will be significantly increased. For repeated violations, fines can be raised by up to 100%.
The Fair Trade Commission announced on August 4 that it will implement revised penalty guidelines for the Subcontracting Act, Franchise Business Act, and Dealer Act starting today. This revision aims to enhance deterrence against legal violations, reflecting concerns that current penalties are too low for serious infractions.
A key feature of the revised guidelines is the rationalization of penalty criteria. To address the issue of low penalties for serious violations, the rates and amounts for fixed and percentage-based fines have been increased, and the classification of severity has been expanded from three to four levels.
Sanctions for repeated violations will be significantly strengthened. For a single violation within the past five years, fines can be increased by up to 50%, and for multiple violations, the maximum penalty can reach 100%.
The commission will also enhance responses to retaliatory actions taken against those who report violations or seek dispute resolution. In the dealership sector, the penalty increase rate will rise from 20% to 30%, and a new basis for increasing penalties in the franchising sector has been established, allowing for increases of up to 30%.
The grounds and scope for reductions in penalties have been narrowed. Previously, self-correction could lead to a reduction of up to 50%, but now it is limited to a maximum of 10% if the violation's effects are substantially eliminated. The cooperation reduction, which applied separately to investigations and reviews (up to 20%), will now be reduced to a maximum of 10% only if cooperation is provided throughout the entire process. Additionally, the 'minor negligence reduction' provision in the franchising sector has been removed.
A Fair Trade Commission official stated, "With this revision, the level of penalties for unfair trade practices in subcontracting, franchising, and dealership sectors will be effectively strengthened. We expect this will deter legal violations by businesses and help establish a fairer trading order."
The Fair Trade Commission announced on August 4 that it will implement revised penalty guidelines for the Subcontracting Act, Franchise Business Act, and Dealer Act starting today. This revision aims to enhance deterrence against legal violations, reflecting concerns that current penalties are too low for serious infractions.
A key feature of the revised guidelines is the rationalization of penalty criteria. To address the issue of low penalties for serious violations, the rates and amounts for fixed and percentage-based fines have been increased, and the classification of severity has been expanded from three to four levels.
Sanctions for repeated violations will be significantly strengthened. For a single violation within the past five years, fines can be increased by up to 50%, and for multiple violations, the maximum penalty can reach 100%.
The commission will also enhance responses to retaliatory actions taken against those who report violations or seek dispute resolution. In the dealership sector, the penalty increase rate will rise from 20% to 30%, and a new basis for increasing penalties in the franchising sector has been established, allowing for increases of up to 30%.
The grounds and scope for reductions in penalties have been narrowed. Previously, self-correction could lead to a reduction of up to 50%, but now it is limited to a maximum of 10% if the violation's effects are substantially eliminated. The cooperation reduction, which applied separately to investigations and reviews (up to 20%), will now be reduced to a maximum of 10% only if cooperation is provided throughout the entire process. Additionally, the 'minor negligence reduction' provision in the franchising sector has been removed.
A Fair Trade Commission official stated, "With this revision, the level of penalties for unfair trade practices in subcontracting, franchising, and dealership sectors will be effectively strengthened. We expect this will deter legal violations by businesses and help establish a fairer trading order."
* This article has been translated by AI.
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