Fair Trade Compliance

Representative types of violations of the Monopoly Regulation and Fair Trade Act include unfair collaborative acts such as price fixing, bid rigging, market division, and customer allocation, as well as abuse of a superior bargaining position, unfair trade practices, unfair labeling and advertising conduct, and unfair conduct in subcontracting transactions.

A violation may be accompanied by the imposition of a penalty surcharge, a corrective order, criminal punishment, and even a civil claim for damages, so the legal responsibility is significant.

▶Types of Violations of the Monopoly Regulation and Fair Trade Act

Internally, a compliance officer and a compliance department should be designated, and authority, responsibility, and the reporting structure (RACI matrix) should be made clear.

In particular, it is necessary for the compliance officer to have an organizational structure in which the risk of violating the Monopoly Regulation and Fair Trade Act is continuously diagnosed and analyzed and any sign of a violation can be reported to management immediately upon its discovery.

In this process, periodically receiving advice from outside legal and accounting experts is also an important preventive strategy.

A company should identify risk items according to its own transaction structure (agency, distribution, affiliate relationships, corporate M&A, procurement bidding, and similar matters).

For example, a platform company should review the risk of abusing market power arising from its fee policy, preferential advertising transactions, and use of big data.

Strategically, a systematic risk diagnosis process is necessary, including periodic preparation of a risk map, internal interviews, document review, and KPI-linked audit procedures.

On this basis, transaction standards, guidelines, internal rules, and a code of conduct should be established to build a management system in which working-level staff can recognize and avoid the risk of a violation.

Training on the Monopoly Regulation and Fair Trade Act is effective when it is designed as general training for all employees, advanced training for working-level staff, and case-focused training for the board of directors and management.

The training content should include recent precedents, the Korea Fair Trade Commission's investigation cases, and the results of internal inspections, so that it accords with practical realities.

In addition, conducting workshops and investigation drills in which the CEO and working-level staff participate directly at least once a year is advantageous for minimizing psychological shock when an actual investigation commences and for building response capacity.

The effectiveness of the training should be managed quantitatively through measures such as training completion rates, survey feedback, and tracking whether similar conduct recurs afterward.

It is necessary to periodically audit transaction records with related and affiliated companies, advertising contracts, terms and conditions, fee and support records, bid participation conditions, and similar items.

In particular, internal monitoring of documents, emails, and messenger communications regarding high-risk phenomena such as pressure to respond to competitors, sharing of price information, and exclusion or preferential treatment of particular companies is necessary.

When a risk item is detected, a manual for task force response to regulatory authorities should be prepared, and data-based training to prevent similar conduct should be carried out repeatedly.

In preparation for a Korea Fair Trade Commission investigation, it is necessary, under the direction of the CEO, to form an investigation response task force, to establish principles for the submission of all documents and materials, to designate those who will give statements, and to establish a strategy for the attendance of counsel.

At the stage of the initial on-site investigation, the difference between voluntary and compulsory investigation, limits on the scope of seizure, the exercise of the right to inspect and copy, the refusal to make statements, and preliminary measures before judgment, among other legal rights, should be accurately understood.

After the investigation, an opinion statement on the investigation report, requests for correction, and materials for response to the penalty surcharge review committee should be prepared in order to secure the requirements for reduction of the penalty surcharge.

The evaluation of voluntary reporting and the use of the immunity and reduction systems should also be actively reviewed.

Fair trade compliance goes beyond merely observing the law, and it is a proactive management tool that reflects legal risk in business strategy and improves the relationship with regulatory authorities.

A company that has this framework can minimize legal risk, enhance its brand value and trust, and secure a competitive advantage in M&A, overseas investment, public bidding, and similar matters.

By contrast, a company that lacks compliance must bear serious disadvantages across its overall management, such as criminal punishment, penalty surcharges, reputational damage, mandatory disclosure of IR information, and difficulties in M&A, if an unlawful act is detected.

Therefore, a company should continuously operate a compliance cycle of risk diagnosis, establishment of internal rules, training and monitoring, audit and investigation response, and follow-up inspection.

The Korea Fair Trade Commission has recently expanded the scope of on-site investigations and uses digital forensics techniques, so the importance of fair trade compliance is growing further.

In addition, the Korea Fair Trade Commission has been implementing a revised CP grade evaluation system since March 1, 2025.

CP refers to the fair trade voluntary compliance program, and the CP grade evaluation is a system under which the Korea Fair Trade Commission evaluates the fair trade voluntary compliance program operated by a company and assigns it a grade.

There are six grades in total, from AAA to D, and a company that receives a grade of A or higher can obtain benefits such as reduction of penalty surcharges.

Where a company does not implement the regulations of the Korea Fair Trade Commission, it receives demerit points and its grade is lowered, and where the grade is lowered, the likelihood of not receiving incentives increases.

🔗Corporate attorney referral, and through this, you may receive legal advisory on prior review and follow-up review of major intra-group transactions, subcontracting transactions, and similar matters, as well as on the management of internal procedures and documents, in order to obtain practical assistance.

The items supported in fair trade compliance advisory and system operation are as follows.

1. Advisory on Interpretation of Fair-Trade-Related Laws and Prior Review of Legal Risk

4. Establishment of a Fair Trade Training System for Executives and Employees and Lectures

5. Monitoring of Voluntary Compliance Program Implementation and Establishment of an Internal Oversight System

6. Legal Response and Review of Voluntary Regulation in the Event of a Fair Trade Violation

7. Improvement of the Fair Trade Case Handling Process and Advisory on the Operation of a Counseling Center