Procedure for Responding to a Fair Trade Commission Investigation

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Select your current step and the content for that step will appear below.

1. 1Start of investigation and request for materials
2. 2On-site investigation
3. 3Questioning and supplementary materials
4. 4Delivery of the examiner's report
5. 5Submission of the respondent's written opinion
6. 6Full commission or subcommittee deliberation
7. 7Resolution (corrective order, administrative fine, criminal referral)
8. 8Objection / administrative lawsuit
9. 9Payment of the administrative fine

• Basic step
• Additional action / option
• Rejection / objection
• End of procedure

Time required

The schedule varies by case, so check with the case examiner in charge (limitation period for dispositions: for cartels, 5 years from the start of the investigation; for other violations, 7 years from the end of the violation); administrative litigation is separate

Cost

Lawyers' fees, economic analysis costs and stamp fees for administrative litigation are separate; check the costs of the KFTC procedure with the department in charge

Procedure guide

Read from start to finish in order. Red text marks deadlines set by law.

1. 1

   A case starts with someone's report (Fair Trade Act §80(2)) or the KFTC's own discovery of a problem, known as ex officio recognition (§80(1)). When the KFTC requests materials in writing, check the scope and deadline, and take steps within the company to preserve related documents and emails so that no one deletes them. This is because deleting materials in itself constitutes obstruction of the investigation. In a cartel (unfair concerted act) case, the first in line can get full exemption from the fine and the second in line a 50% reduction, and if the reduction or exemption is recognized, a criminal referral is also in principle waived (§44, Enforcement Decree §51), so consider right away whether to apply for leniency.

2. 2

   When investigating officials visit your business premises, first check the official investigation letter (a document stating the purpose, period, subject and scope of the investigation) (§81). This is because the scope stated in the letter is the limit of the investigation. Contact counsel right away and have them take part in the investigation (§83); you can refuse investigation that goes beyond the scope stated in the letter. When the investigation ends, get a list of the materials collected and submitted, and if the KFTC temporarily keeps materials, compare the custody record with the materials actually taken (§81(7)).

3. 3

   Next, the KFTC has officers and employees appear for questioning (an investigation in which investigators ask and they answer) and requests additional materials. Read the statement record before signing it, and ask for any part that differs from what was said to be corrected. This is because once signed, the record is used as evidence as it is. If the case examiner finds no violation of law, the case ends with no violation found or closure of the review procedure.

4. 4

   The case examiner submits an examiner's report stating the facts of the violation, the applicable provisions and the proposed measures to the Commission, and also sends it to the respondent (the company under investigation). The company submits a written opinion rebutting the facts, legal principles and calculation of the fine within 8 weeks (6 weeks for subcommittee cases) from the day it receives the report. There is a lot to rebut, so you must start preparing as soon as you receive the report. You can apply for an extension of the deadline and to inspect and copy the case records.

5. 5

   Except for certain cases such as cartels, while the company is under KFTC investigation or deliberation, it can propose a corrective plan of its own and apply for a consent decision (§89). If the KFTC accepts it, the case ends without a finding of whether the conduct was illegal. Because it ends without a finding of illegality, it is an option to consider when you do not want to prolong the dispute.

6. 6

   A full commission meeting with all commissioners (11) or a subcommittee of 3 commissioners holds a deliberation hearing and hears the arguments of both the case examiner and the respondent (§58, §59). The respondent and its representative (lawyer) can appear and make statements (§93), and can apply to examine witnesses or submit an economic analysis report. Deliberation may be held several times, so use these sessions to add arguments you could not fully make in the written opinion.

7. 7

   The Commission sends the company a written resolution containing its conclusion. Measures include a corrective order, an administrative fine, a criminal referral and a warning. A criminal referral is made to the Commissioner of the Serious Crimes Investigation Agency, and after investigation a prosecutor of the Public Prosecution Office (formerly the Prosecutors' Office) decides whether to indict (§129(2)). Crimes under Fair Trade Act §124 and §125 can be prosecuted only upon a referral by the KFTC (§129(1)). So whether the case moves on to criminal proceedings depends on how you respond at the KFTC stage.

   Current step
8. 8

   If you find the resolution hard to accept, file an objection (§96) with the KFTC within 30 days from the day you receive notice of the disposition (the written resolution), or file a cancellation lawsuit (§99) with the Seoul High Court (the court with exclusive jurisdiction over these cases, §100) within 30 days from the same day. If you went through an objection, file the lawsuit within 30 days from the day you receive the written ruling on the objection. If the deadline passes, the disposition becomes final as it is. The administrative fine must be paid within 60 days from the date of the payment notice (Enforcement Decree §85(2)). The payment deadline keeps running even during a lawsuit, so also consider an extension of the payment deadline or installment payment (§103) or a stay of execution.

Frequently asked questions

Practical questions that come up right away in this procedure.

QWe received a request to submit materials. What if we cannot submit everything by the deadline?

Before the deadline, explain your situation in writing to the investigating official in charge and agree on a submission schedule. If there are reasons such as a merger or rehabilitation proceedings, seizure of the books, or a fire or disaster, you can also apply to postpone the investigation itself.On the other hand, failing to comply with a submission order or submitting false materials is subject to criminal punishment. If you also fail to comply with a renewed order, a charge for compelling compliance (a monetary burden to make you obey the order) may be imposed.You also cannot receive the reduction (up to 10%) of the administrative fine (a monetary sanction for a violation) for cooperating with the investigation and deliberation. So it is safest to submit whatever part is ready first and state when you will submit the rest.

QDuring an on-site investigation, what investigator requests can we refuse?

You can refuse investigation that goes beyond the investigation period, purpose, subject or method stated in the official investigation letter. When electronic data is collected, you can ask to observe the collection process, to select the data, and to be given copies.Unless there is a good reason not to, the KFTC must allow this. However, when you refuse, you must state the basis and keep a record.This is because a refusal without a basis may be seen as refusing the investigation. Hiding or deleting materials within the scope of the letter is obstruction of the investigation.

QCan a lawyer sit in when an officer or employee is questioned?

Yes, that is possible. The company under investigation can have a lawyer take part in the whole investigation process, including the preparation of the statement record. Read the statement record before signing it, and you can ask for anything untrue to be corrected.If you do not know something, you can say "I will answer after checking." If you answer by guessing, those words stay in the record as they are and are hard to correct later.

QWe received the examiner's report, but the deadline for our written opinion is too short. Can it be extended?

Yes, you can apply for an extension. If you apply in writing, stating the reasons, before the deadline expires, the presiding commissioner or the chair of the subcommittee decides whether to extend it.At the same time, apply to inspect and copy the case records to check the materials the case examiner relied on. You need to see the supporting materials to rebut them accurately.Write the written opinion in three parts: facts, legal principles and calculation of the fine. You can supplement it again at the deliberation hearing.

QIf an administrative fine is imposed, do we have to pay it even during a lawsuit?

Yes, you must pay. Even if you file a lawsuit, the payment deadline (60 days from the date of the payment notice) keeps running, and if you miss it, additional charges are added and enforced collection begins.So if you are short of funds, apply before the deadline for an extension of the payment deadline or payment in installments, or also apply to the Seoul High Court for a stay of execution.

QCan company employees respond without a lawyer?

It is possible at the early stages, but it gets harder later on. The company's in-house legal team can handle the initial response to requests for materials and on-site investigations.However, the written opinion, deliberation and challenge stages after receiving the examiner's report are difficult without the help of a lawyer experienced in fair trade cases. In cartel cases in particular, the leniency ranking decides whether you get full exemption from the fine and from a criminal referral.So you should consult a lawyer as soon as you receive notice that an investigation has begun.