Report to the Fair Trade Commission

1. Price-Fixing and Bid Rigging
Price-fixing is conduct in which multiple business entities exclude competition and set a fixed price in advance, exerting an unfavorable influence on consumers.

Bid rigging is conduct in which, in order to restrict competition in a public or private tender, the participants agree in advance on the successful bidder, the price, the bidding conditions, and the like; it is a representative unfair practice that distorts market order.

2. Abuse of a Market-Dominant Position
This is conduct in which a business entity holding a high market share within the market uses its position to exclude competing business entities or to disadvantage consumers.

3. Unfair Trade Practices
Unfair trade practices prohibited under the Monopoly Regulation and Fair Trade Act include refusal to deal, discriminatory trade conditions, unfair inducement of customers, tie-in selling, coercion of purchase, and the like.

4. Violations of the Fair Transactions in Subcontracting Act
This includes conduct in which a principal contractor, such as a large company, makes unfair demands on a subcontractor, or unfairly reduces or delays payment of the price.

5. Unfair Collaborative Acts
This is conduct in which business entities consult in advance on the market price, output, sales territory, trade conditions, and the like to restrict competition.

6. Acts Obstructing Business Activities
This is conduct that unfairly obstructs the business activities of a particular competitor, and includes the unfair use of technology, the unfair inducement of personnel, the unfair disclosure of information, and the like.

7. Abuse of Intellectual Property Rights and Acts Restricting Exclusive Dealings
This is a case of using intellectual property rights such as patent rights and trademark rights to abuse a market-dominant position, or to compel exclusive dealings for the purpose of restricting competition.

8. Abuse of a Superior Bargaining Position
This is conduct in which a business entity holding a superior position makes unfair demands on, or coerces, its counterparty.

9. Unfair Labeling and Advertising
Conduct inducing consumer misperception through false or exaggerated advertising, or conduct inducing unfair competition, is also subject to a report.

Before responding to a report to the Korea Fair Trade Commission, you should examine the cases that are excluded from the scope of application of a violation of the Monopoly Regulation and Fair Trade Act.

Where a consumer, after purchasing goods or a service, returns or obtains a refund due to a defect or the like, and then files a report to the Korea Fair Trade Commission against the company concerned, the procedure cannot proceed, because matters relating to consumer harm relief fall within the jurisdiction of the Korea Consumer Agency rather than the Korea Fair Trade Commission.

In addition, transactions between individuals who are not business entities are also not subject to a report to the Korea Fair Trade Commission, and the same applies to legal disputes arising from private relationships.

Accordingly, rather than responding to a report to the Korea Fair Trade Commission on your own, please request a consultation with a legal expert about the matter as quickly as possible.

1. Clarifying the Grounds for the Report
A company seeking to file a report with the Korea Fair Trade Commission must first clearly ascertain whether the harm it has suffered constitutes an unlawful act under the Monopoly Regulation and Fair Trade Act.

For example, this may include price-fixing, unfair collaborative acts, abuse of a market-dominant position, unfair trade practices (tie-in selling, refusal to deal, discriminatory pricing, etc.), technology misappropriation, or violations of the Fair Transactions in Subcontracting Act.

The mere existence of friction with a business partner or unpleasant conduct by a competitor does not lead to a report to the Korea Fair Trade Commission; the elements of a legal violation must be objectively established.

2. Reporting Procedure
A report to the Korea Fair Trade Commission can be made online (through the Korea Fair Trade Commission website), in writing, by telephone, in person, and the like.

However, in the case of an official "report" rather than a mere "tip," the report must be furnished with the essential information.

This includes the exact name and contact information of the party reported against, the specific content of the violation, relevant evidentiary materials (contracts, emails, recordings, receipts, etc.), the content of the harm, and an estimate of the amount of harm.

3. Expected Effects
Where a report to the Korea Fair Trade Commission is accepted and an investigation and deliberation are commenced, measures such as a corrective order, the imposition of a penalty surcharge, and a criminal accusation may be taken against the violation.

Such outcomes have an important effect in halting unlawful competitive conduct and restoring a fair competitive order going forward.

In addition, the materials secured in that investigation may be used as favorable evidence in civil litigation or a claim for damages, contributing to increasing the likelihood of prevailing in subsequent legal disputes.

4. Points of Caution
However, a report to the Korea Fair Trade Commission must be approached with care, and a false or groundless report carries the risk of a legal counterattack such as defamation, false accusation, or interference with business.

In addition, the name of the reporting company or the content of its transactions may be exposed during the Korea Fair Trade Commission's investigation, and accordingly there is also a possibility of suffering retaliatory severance of dealings or disadvantages from the company reported against.

Therefore, you should conduct sufficient legal counsel and business risk analysis in advance, and where you wish to maintain anonymity, you should also examine the relevant request procedure in concrete terms.

1. Initial Response Strategy
A company notified of the receipt of a report to the Korea Fair Trade Commission or of the commencement of an investigation needs to activate its response system immediately.

It should promptly conduct an internal investigation into the reported facts and systematically secure the relevant contracts, transaction records, emails, communication records, and the like.

While preserving the materials transparently so as not to be suspected of destroying evidence, it should select the materials capable of defending its own position and retain a specialist attorney early to build the logic of its response.

Because a failure in the initial response immediately has a significant impact on corporate credibility, the level of the penalty surcharge, the possibility of future criminal punishment, and the like, prompt and precise judgment is required.

2. The Korea Fair Trade Commission Investigation Procedure
When a report is received, the Korea Fair Trade Commission may conduct a high-intensity investigation, including requests for the submission of materials, hearing statements from relevant persons, and on-site inspections.

In particular, during an on-site visit, servers, computers, email materials, and the like may be secured directly, in which case the management of security and access rights to the company's internal network must also be prepared in advance.

If the investigation results in the Korea Fair Trade Commission finding a violation, serious dispositions such as the imposition of a penalty surcharge, a corrective order, and a criminal accusation may be issued.

In preparation for this, strategic communication—such as clarifying the facts during the investigation process, removing room for misunderstanding, and asserting the principle of proportionality—is very important.

3. Legal and Management Risks
The impact a company sustains as a result of a report to the Korea Fair Trade Commission goes beyond a mere legal disposition.

If a violation is found, it may lead to a penalty surcharge of several billion won or more, business changes following a corrective order, criminal punishment, and the indictment and conviction of the officers and employees in charge.

In addition, serious damage may be done to the company's image through media coverage, and there is also a great risk that the trust in dealings with key customers or partner companies may collapse.

Beyond this, serious negative repercussions arise across corporate activities as a whole, including a decline in the trust of shareholders or investors, a worsening of evaluations by financial institutions, and mergers and acquisitions (M&A).

4. Response Strategy
The response to a report to the Korea Fair Trade Commission yields greatly differing results depending on how well a company has ordinarily established a compliance management system.

First, a balanced strategy is necessary that thoroughly prepares materials capable of proving that the transaction or contract at issue was carried out for objectively justifiable reasons, and that, while faithfully cooperating with the Korea Fair Trade Commission's investigation, also actively exercises legal rights.

Depending on the circumstances, disadvantages may also be minimized through the submission of a voluntary corrective plan, consultation with the Korea Fair Trade Commission, or a request for conciliation.

Internally, the prevention of recurrence and the strengthening of organization-wide responsiveness should be achieved through strengthening fair trade education for all departments, strengthening the legal review system, introducing a risk monitoring system, and the like.

Ultimately, it must be borne in mind that responding to a Korea Fair Trade Commission investigation is not a mere defense but is also an opportunity to enhance the company's legal and ethical credibility.