Fair Trade Act Violation Lawyer | Navigating administrative sanctions and criminal exposure together

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.

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

Fair Trade Act Violation | How fees are structured for Fair Trade Act cases

※ 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

Frequently Asked Questions

Official References

• Korea Law Information Center — https://www.law.go.kr
• Easy-to-Find Everyday Legal Information — https://easylaw.go.kr
• Korea Legal Aid Corporation — https://www.klac.or.kr
• Ministry of Employment and Labor — https://www.moel.go.kr