Fair Trade Act Violation Lawyer
Fair Trade Act Violation Lawyer | Navigating administrative sanctions and criminal exposure together
The Monopoly Regulation and Fair Trade Act (독점규제 및 공정거래에 관한 법률, "Fair Trade Act") prohibits cartels, abuse of market dominance, unfair trade practices, and unfair support to affiliates. A single suspected violation can result in a KFTC corrective order and surcharge (행정제재) and, if the KFTC decides the conduct is serious enough, a separate criminal referral that sends the case to prosecutors (형사처벌). Because the KFTC's exclusive referral authority under Article 129 controls whether prosecution can even begin for most violation types, understanding the administrative process is usually the first step in managing the criminal risk as well.
Fair Trade Act Violation | What conduct does the Fair Trade Act actually cover?
The Act does not punish 'unfairness' in the abstract. Liability attaches only when conduct fits one of several defined categories, each with its own elements and its own typical sanction pattern.
Agreements between competitors to fix prices, restrict output, allocate markets or customers, or rig bids are prohibited if they restrict competition in a relevant market (공정거래법 제40조). Cartels are the category most likely to draw both a heavy surcharge and a criminal referral, and leniency applicants receive a reduced or waived surcharge and immunity from referral for the first qualifying applicant.
A company found to hold a dominant position in a relevant market can be sanctioned for unfairly setting prices, limiting production, excluding competitors, or interfering with a competitor's business (공정거래법 제5조). Defining the relevant market and dominance itself is usually the central factual battleground.
This broad category covers refusal to deal, exclusive dealing, tying, resale price maintenance, and abuse of bargaining position against smaller trading partners (공정거래법 제45조). Many disputes with subcontractors or franchisees are pursued under this article rather than the cartel or dominance provisions.
Providing abnormally favorable terms to affiliated companies, particularly to benefit a controlling shareholder's family, can be sanctioned even without proof of harm to a third-party competitor (공정거래법 제47조). This provision is frequently applied to conglomerate (chaebol) groups and their internal transactions.
Separately from conduct-based violations, large business groups face structural obligations such as disclosure of internal transactions and restrictions on cross-shareholding, and failure to comply is sanctioned independently of whether any competitive harm occurred.
A single act can be reviewed under more than one article
The KFTC frequently examines the same set of facts under multiple provisions at once — for example, a large supplier's conduct might be reviewed both as abuse of dominance and as an unfair trade practice against a smaller partner. Which article actually attaches determines the surcharge calculation base and whether criminal referral is even legally possible, so the classification itself is often the first thing worth contesting.
Fair Trade Act Violation | How a KFTC investigation and administrative sanction actually proceeds
Most cases begin with a KFTC on-site inspection or a written request for materials, not with an arrest. Understanding this stage matters because the administrative record built here often becomes the evidentiary basis for any later criminal referral.
Investigation triggers and on-site inspection
The KFTC opens an investigation based on a third-party complaint, a leniency application by a cartel participant, or its own market monitoring. Investigators can request documents and conduct on-site inspections, and how the company responds during this early stage — what is voluntarily disclosed versus what is properly objected to — shapes the rest of the case.
Examiner's report and the company's right to respond
After the investigation, the case examiner drafts a report proposing specific sanctions, which is sent to the company before the case goes to the Commission's deliberation session (전원회의 or 소회의). The company has the right to review the report and submit a written opinion and to appear and argue orally at the hearing, and this is typically the most important opportunity to narrow the scope of liability before a decision is issued.
Corrective orders and surcharges
If a violation is found, the KFTC can order the company to cease the conduct, take corrective measures, and pay a surcharge calculated based on related sales revenue during the violation period (공정거래법 제49조 및 제102조 등). The surcharge amount is often the single biggest financial exposure in the case and is calculated using KFTC guidelines that leave room for argument over the relevant sales base and aggravating or mitigating factors.
Appealing a KFTC decision
A company that disagrees with a KFTC decision can file an administrative appeal directly with the Seoul High Court rather than going through a lower administrative court first, reflecting the specialized nature of fair trade cases. The appeal period and procedural requirements are strict, so the decision on whether to appeal needs to be made promptly after the written decision is served.
Fair Trade Act Violation | When does a Fair Trade Act case become a criminal case?
Not every violation leads to prosecution. For most Fair Trade Act offenses, the KFTC holds exclusive authority to decide whether a case is referred to the prosecution, which makes the administrative stage strategically inseparable from the criminal risk.
The KFTC's exclusive referral requirement
For core offenses such as cartels and abuse of market dominance, prosecutors generally cannot indict without a referral from the KFTC (공정거래법 제129조). This means that arguments made during the administrative investigation — disputing whether the conduct meets the statutory elements at all — can determine whether a criminal case ever starts.
Referral criteria and severity thresholds
The KFTC refers a case for prosecution when it judges the violation to be serious based on factors such as the scale of harm, the degree of intent, repeat violation history, and impact on the market, following its own referral guidelines. Cases involving large-scale, long-running cartels or repeat offenders are more likely to be referred than isolated or borderline conduct.
Criminal penalties and who can be liable
Fair Trade Act violations that are prosecuted can carry imprisonment or fines against the individuals who directed or executed the conduct, and separately the company itself can be fined under the dual liability structure common in Korean administrative criminal statutes, unless it can show it exercised due care to prevent the violation (공정거래법 제125조 내지 제130조 등). Executives and compliance officers involved in the decision-making are often examined individually, separate from the corporate entity's own liability.
Managing parallel administrative and criminal proceedings
Because the administrative and criminal tracks can run on different timelines with different decision-makers, statements or documents submitted to the KFTC can later surface in a criminal investigation. Coordinating the position taken in the administrative hearing with what may later be argued in a criminal proceeding is one of the more delicate aspects of defending these cases.
Fair Trade Act Violation | Leniency for cartel participants
For cartel cases specifically, the Fair Trade Act's leniency program can substantially change the outcome for a company that decides to cooperate, but the timing and completeness of the application matter enormously.
First and second applicant treatment
The first company to report a cartel and provide sufficient evidence can receive full surcharge exemption and immunity from criminal referral, while the second qualifying applicant typically receives a substantial partial reduction (공정거래법 제44조). Being first matters more than being thorough, so the timing of the decision to apply is often as important as the content of the disclosure.
What counts as a qualifying application
To qualify, the applicant generally must be the first to submit, must provide evidence the KFTC did not already independently possess, must fully cooperate throughout the investigation, and must have stopped participating in the cartel. An incomplete or later-withdrawn cooperation can result in the leniency benefit being revoked even after it was initially granted.
Leniency does not erase civil exposure
A leniency grant reduces or removes the surcharge and criminal referral risk toward the KFTC, but it does not shield the company from private damages claims brought by counterparties harmed by the cartel. Evidence disclosed during the leniency process can itself become part of the record in a follow-on civil damages suit.
Fair Trade Act Violation | From first contact with the KFTC to case resolution
Before responding to a document request or on-site inspection, we review the scope of the suspected conduct, identify what documents and communications may already be in the KFTC's possession, and set a response strategy that avoids both obstruction and unnecessary self-incrimination.
During the investigation, we prepare witnesses for interviews, review document production for privilege and relevance, and evaluate whether a leniency application is available and advisable if cartel conduct is involved.
Once the case examiner issues a report proposing sanctions, we prepare a written opinion challenging the factual findings, market definition, or surcharge calculation, and represent the company at the Commission hearing.
After the KFTC issues its decision, we assess whether an appeal to the Seoul High Court is warranted given the appeal period, the strength of the factual record, and the financial exposure from the surcharge.
If the case is or may be referred for criminal investigation, we align the administrative defense record with the criminal defense strategy so that positions taken before the KFTC do not undermine the client in a subsequent prosecutor or court proceeding.
Fair Trade Act Violation | How fees are structured for Fair Trade Act cases
The retainer is generally set based on the complexity of the alleged conduct, the number of relevant provisions at issue, and whether the matter involves a single company or a multi-party cartel investigation requiring coordination with other counsel.
Representing the company at the Commission's deliberation session and, if necessary, filing an appeal to the Seoul High Court are typically billed as separate stages, since each requires a distinct set of written submissions and preparation.
If the case proceeds to a criminal referral and prosecution, criminal defense fees are assessed separately from the administrative-stage fees, reflecting the additional investigation and trial work involved.
Costs such as expert economic analysis for market definition or damages calculation, document translation, and travel for on-site matters are billed separately as incurred and are discussed in advance.
※ Costs vary depending on case complexity and specific circumstances; exact fees will be provided during consultation. No specific outcome is guaranteed.
Fair Trade Act Violation | Self-Check Before Your Consultation
1️⃣ Company Facing a KFTC Investigation
- Have you received a written request for materials or notice of an on-site inspection from the KFTC?
- Do you know which specific business unit or transaction is being scrutinized?
- Have any employees been interviewed by KFTC investigators without company counsel present?
- Have you preserved relevant documents and communications rather than routinely deleting them?
2️⃣ Cartel Participant Considering Leniency
- Has your company already stopped participating in the suspected agreement?
- Do you have documentary evidence the KFTC likely does not already possess?
- Have you confirmed whether another participant may have already applied for leniency ahead of you?
- Are you prepared to fully cooperate through the entire investigation, not just the initial filing?
3️⃣ Executive Facing Individual Criminal Exposure
- Were you personally involved in approving or directing the conduct under review?
- Has the case already been referred to the prosecution, or is it still at the KFTC stage?
- Have statements you gave during the administrative investigation been recorded or transcribed?
- Do you have separate counsel from the company if your interests may diverge from the company's?
4️⃣ Business Partner Alleging Unfair Treatment
- Can you describe the specific term or practice you believe is unfair, and by whom?
- Do you have the underlying contract or transaction records showing the disputed terms?
- Have you already raised the issue with the counterparty or a trade association before considering a KFTC complaint?
- Are you seeking a corrective order, damages, or both?
