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Wednesday, August 1, 2012

Korean FTC Got Criticized

Korea’s Fair Trade Commission (FTC) suddenly faced increasing criticism from parties that believe it shouldn’t be granted the exclusive right to decide whether the organizations should face investigation for antitrust activities.

At the moment, the FTC in the country holds the exclusive rights to such cases as a way to stop abuse by law enforcement agencies. The problem is that it is now coming under fire from officials in the local legal field, claiming that the 32-year-old system obviously needs a refresh. Others claim that the watchdog seems more eager to protect companies than victims of unfair trade.

For instance, the FTC investigated Samsung and LG, which account for 90% of the Korean market, and found them guilty of fixing the prices of home appliances. But the critics complain that the regulator’s leniency program exempted LG from a fine of $16 million, and Samsung got its fine halved. The media reports also claimed that up until 2000, the FTC filed a complaint against 2% of the total cases detected. Nevertheless, the figure in question had dropped to 0.95% over the past decade even though the annual number of cases the FTC handled had increased 5- to 6-fold during the same period. Meanwhile, of the 3,505 cases the agency detected in 2010, it filed a complaint in only 19 cases. In 1,763 other cases, the FTC just issued a warning.

Critics are therefore pointing at the low amount of fines – they say that the agency usually imposed fines of 1-2% of related profits, while in other developed countries the rate increased to 15-20% of profits. Now politicians and civic groups want tougher measures, including criminal charges, to be adopted in order to prevent unfair trade among conglomerates along with abolishing the exclusive right of the Fair Trade Commission.

In response, the FTC claimed that antitrust cases should be handled differently from other criminal charges. It explained it due to the consequences required to be considered carefully, as in lots of countries, criminal charges were supplementary measures along with administrative punishment. And Korea was one of 13 countries which imposed criminal charges, unlike Australia, Sweden, the Netherlands, Spain and Finland, which had no regulation for criminal charges. And of those 13 countries, more than a half had no record of punishment over the past decade.

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