Cartel leniency in South Korea: overview

A Q&A guide to cartel leniency law in South Korea.

The Q&A gives a succinct overview of leniency and immunity, the applicable procedure and the regulatory authorities. In particular, it covers the conditions to be satisfied, the method of making an application, availability of immunity from civil fines to individuals, the scope of leniency, circumstances when leniency may be withdrawn, leniency plus, confidentiality and disclosure, and proposals for reform.

To compare answers across multiple jurisdictions visit the Cartel leniency Country Q&A tool.

This Q&A is part of the global guide to competition and cartel leniency. For a full list of jurisdictional Cartel Leniency Q&As visit www.practicallaw.com/leniency-guide.

For a full list of jurisdictional Competition Q&As, which provide a high level overview of merger control, restrictive agreements and practices, monopolies and abuse of market power, and joint ventures in multiple jurisdictions, visit www.practicallaw.com/mergercontrol-guide and www.practicallaw.com/restraintsoftrade-guide.

Contents

Regulation

1. What laws provide for a leniency programme and which regulatory authority administers it? Is there any published guidance?

Applicable laws and guidance

The leniency programme was first introduced in 1996 and has been amended in 2001, 2004, 2007, 2009, 2011 and 2013 under the Monopoly Regulation and Fair Trade Act (MRFTA). It is regulated by Article 22-2 of the MRFTA.

Additional details are set out in:

  • Article 35 of the MRFTA Enforcement Decree (Decree).

  • The Korea Fair Trade Commission's (KFTC) Notice on Implementation of a Leniency Programme for Corrective Measures against Confessors (Leniency Notice).

The English version of the MRFTA appears on the KFTC website (see box, The regulatory authority).

Regulatory authority

The KFTC is responsible for carrying out the leniency programme. It is an independent, ministerial-level government organisation, which consists of nine commissioners.

 

Scope of application

2. What infringements of competition law does the leniency programme cover?

The leniency programme only applies to unfair collaborative acts, that is, cartels.

 

Recent cases

3. What notable recent cases have applied the leniency programme?

The leniency programme has been used in 155 cases between 2005 and 2013 and is regarded as quite effective. It applies to large domestic as well as international cartel cases. Information on individual cases and the identity of applicants is classified to protect confidentiality (see Question 15, Confidentiality requests).

 

Availability of leniency

Administrative liability

4. Is full immunity from administrative penalties available? What conditions must be met for immunity to be granted?

Only the first undertaking that files an application for leniency and has its applicant status confirmed by the KFTC in a final decision can receive full immunity from civil fines or corrective measures. To receive full immunity, the applicant must satisfy the following conditions (immunity conditions) (Articles 35(1) 1. and 2., Decree):

  • Be the first to provide independently evidence that is necessary to prove a cartel.

  • Make a voluntary report before the KFTC obtains any information or enough evidence to prove a cartel.

  • Fully co-operate with the KFTC's investigation, by stating all facts concerning cartels and submitting relevant documents until the investigation is completed.

  • End its cartel involvement immediately after filing an application for leniency.

  • Not have been involved in any acts that coerced other entities either to participate in cartels or not to cease.

  • Not be repeatedly involved in cartels within a certain period of time (five years under the Leniency Notice).

 
5. Is there a sliding scale of available leniency from administrative penalties?

The second undertaking to apply can receive a 50% reduction in civil fines if the undertaking (Article 35(1) 3., Decree):

  • Is the second to independently provide evidence that is necessary to prove a cartel.

  • Fully co-operates with the KFTC's investigation, by making statements concerning cartels and submitting relevant documents until the investigation is completed.

  • Ends its cartel involvement immediately after filing an application for leniency.

  • Has not been involved in any acts that coerced other entities either to participate in cartels or not to cease.

  • Is not a participant in the cartel consisting of only two participants.

  • Makes a report or co-operate with the KFTC's investigation within two years from the date when the first undertaking made a report or commenced co-operating with the KFTC.

  • Has not been repeatedly involved in cartels within a certain period of time (five years under the Leniency Notice).

No leniency is available for later applicants.

 
6. Is immunity or leniency for administrative penalties available to individuals? If so, what conditions apply?

Individuals are not subject to civil fines for competition law breaches, so there is no separate leniency programme for individuals.

Criminal liability

 
7. Is immunity or leniency available for companies and/or its employees in relation to criminal prosecution? What are the implications for employees when an undertaking has been granted immunity or leniency?

Circumstances

Under the MRFTA, the leniency programme covers corrective measures and civil fines, and does not explicitly provide immunity from criminal prosecution. The Prosecutor's Office is the sole authority for criminal prosecution. However, it can only take action against an undertaking and/or its executive or employees for an MRFTA breach if they are referred by the KFTC for criminal prosecution. There is no criminal liability if the KFTC does not make this referral. Currently, the KFTC's policy is not to refer an undertaking and/or its executive or employees to the Prosecutor's Office if that undertaking has qualified for first- or second-ranked leniency status, unless extraordinary circumstances apply.

Proceedings against employees

Once an undertaking complies with leniency conditions, it is the KFTC's policy not to refer its executives and employees to the Prosecutor's Office for criminal prosecution (see above, Circumstances). Therefore, individuals are not subject to criminal proceedings.

Employees' interests

Once an undertaking complies with leniency conditions, it is the KFTC's policy not to refer its executives and employees to the Prosecutor's Office for criminal prosecution (see above, Circumstances). Therefore, no conflict of interest between the undertaking and its executives and employees is likely to arise.

 

Application proceedings

8. When should an application for leniency be made?

In principle, there is no time limit for an application. However, the second undertaking must make a report or co-operate with the KFTC's investigation within two years from the date when the first undertaking made a report or commenced co-operating with the KFTC (see Question 5).

In practice, the KFTC does not accept any applications submitted after the examination report (see Question 10) is issued.

An undertaking should apply as soon as possible after becoming aware of the cartel, because to meet the conditions for full or partial immunity, it must be either the first or second applicant (see Questions 4 and 5).

 
9. What are the procedural rules for leniency applications?

Relevant authority

Applications must be made to the Cartel Regulation Policy Division at the KTFC (see box, The regulatory authority).

Applicant

The application must be made by:

  • The undertaking.

  • One of the undertaking's executives or employees with a right of representation.

  • An attorney with a right of representation.

Two or more companies can file an application for leniency jointly only if the relationship between them is of either:

  • Affiliate companies under actual control

  • Split-off or business transfer companies which satisfy requirements of the KFTC.

Informal/confidential guidance

No unofficial guidance is available. The risk of an applicant not receiving full immunity or leniency rests with that applicant, even where it reports voluntarily.

Form of application

Applications can be made orally (see below, Oral statements) or in writing, by post, fax or e-mail. A written application form is attached to the Leniency Notice. A simplified version exists (see below, Markers).

Markers

A simplified process exists, which can be considered a marker. The simplified application only requires the applicant's identity and an overview of the cartel rather than the full information (see below, Information/evidence). The date of filing is considered to be the date this simplified application is submitted. The initial maximum supplemental period that can be granted at the time of the leniency application is 15 days. An additional supplemental period of 60 days may be granted if the applicant shows justifiable reason, that is, requiring a considerable time to collect evidence. The undertaking must complete the full application within this period, and the application then proceeds to review (see Question 10). However, the supplemental period can be extended over 60 days if the KFTC considers such an extension necessary for the collection and submission of evidentiary materials and statements (for example, in an international cartel case).

Information/evidence

The application must include:

  • The applicant's identity (such as company name, address, responsible staff and contact information).

  • An overview of the cartel (providing details of what took place, where, when, who, why and how).

  • Evidentiary documents and lists.

  • Evidence of the applicant having ceased activity in the cartel.

  • Statement to fully co-operate with the KFTC until the final decision of the KFTC on the cartel.

Generally, all facts relevant to the cartel must be stated, and all available evidence submitted.

Applicants are expected to provide the KFTC with the evidence with which the KFTC can prove the cartel no later than the end of the supplemental period.

Oral statements

Applications can be made orally. A public official records or video-records the statement, and usually asks questions. An oral statement must include all the required evidence (see above,Information/evidence). Oral application by telephone is not allowed.

Short-form applications

Not applicable.

 
10. What are the applicable procedures and timetable?

The undertaking applies, either in full or using the simplified process (see Question 9, Markers). After an application is made or a simplified application corrected, the KFTC reviews the case to determine whether leniency can be granted, but it does not confirm the applicant's place in the queue (confirmation of status) until it makes a final decision. After the KFTC conducts an investigation into the case, the KFTC's case examiner issues an examination report based on the findings. This report is the same as a:

  • Complaint in the US.

  • Statement of objections in the EU.

The KFTC then makes a final decision after holding a hearing. On making the final decision, the KFTC also confirms the applicant’s place in the queue (confirmation of status) and decides whether and how leniency will be granted.

 

Withdrawal of leniency

11. In what circumstances and at what stage of the proceedings can leniency be withdrawn? What implications does the withdrawal of leniency from one company have for other applicants?

The KFTC does not provide the applicant with a confirmation of leniency status before its final decision, therefore the withdrawal of leniency does not occur before its final decision. However, if the KFTC does not recognise an applicant’s leniency status on making a final decision due to the applicant’s withdrawal of application for leniency, the following leniency applicant can move up in the leniency ranking (including full immunity).

 

Scope of protection

12. What is the scope of leniency protection after it has been granted?

The scope of leniency protection is limited to the cartel activities stated in the application. In the case of a simplified application, the scope of cartel activities that the applicant provides information on can be expanded or reduced during the correction period (see Question 9, Markers).

 
13. Does the competition authority offer any further reduction in fines for an undertaking's activities in one market if it is the first to disclose restrictive agreements and practices in another market (leniency plus)?

If an undertaking (subject to civil fines and corrective measures for a cartel) applies for and receives full immunity for another cartel, it can receive additional leniency in the cartel that was previously under investigation (Article 35(1) 5., Decree). This additional leniency is only available for the first leniency applicant. The degree of additional leniency is determined by the scope of the existing and new cartels for which immunity is granted. The applicant can receive less than 20%, 30%, 50% or full immunity depending on the second cartel's scale (Leniency Notice).

 
14. Does the grant of leniency affect a third party's ability to bring a follow-on damages action against a leniency applicant?

There are no rules to protect leniency applicants from a third party's follow-on damage action.

 

Confidentiality and disclosure

15. What are the rules relating to confidentiality during a leniency application?

Identity disclosure

During an investigation or in a final decision, the KFTC does not provide information that may reveal the applicant's identity to a third party (including other undertakings). However, an exception can be made if documents revealing the applicant's identity are required to be submitted to court for a lawsuit, or the applicant consents to the disclosure (Article 22-2(2), MRFTA and Article 35(2), Decree).

Information disclosure

Evidence that was used to prove cartel activities is provided to other entities after the examination report is issued at the deliberation stage (see Question 10). However, any information that may reveal that such documents were obtained from voluntary reporting must be deleted or redacted.

Confidentiality requests

The applicant can request confidentiality for the documents submitted or part of any document submitted. However, during a lawsuit, the court can order the KFTC to provide confidential documents submitted by the leniency applicant, whether or not the applicant is a party to the lawsuit.

 
16. What are the rules concerning disclosure of statements made in support of a leniency application?

Domestic submissions and domestic discovery

A domestic court can order the KFTC to submit leniency-related information, although it has not done so in practice.

Domestic submissions and foreign discovery

There is no MRFTA provision that allows the KFTC to submit leniency-related information to a foreign court, and there is no treaty or agreement on the matter. No foreign court has ever made such a request.

Foreign submissions and domestic discovery

There is no MRFTA provision on accepting information submitted in a foreign jurisdiction, and in practice, no domestic court has made such a request.

 

Inter-agency co-operation

17. Does the regulatory authority in your jurisdiction co-operate with regulatory authorities from other jurisdictions in relation to leniency? If so, what is the legal basis for and extent of co-operation?

The KFTC is making efforts to promote international co-operation with competition authorities in the EU, Canada, and so on, by executing agreements memorandums of understanding (MOUs) with them. However, these agreements or MOUs do not contain explicit provisions concerning co-operation in relation to leniency.

 

Proposals for reform

18. Are there any proposals for reform?

Major amendments to the MRFTA were made in recent years (see Question 1, Applicable laws and guidance). There are currently no major proposals for reform.

 

Online resources

Korea Fair Trade Commission (KFTC)

W www.ftc.go.kr

Description. The KFTC has an official Korean-language website, which provides up-to-date information on the legislation, rules/guidelines, decisions, policies and organisation of the KFTC and summary of relevant judgments by Korean courts.

KFTC (English version)

W eng.ftc.go.kr

Description. The KFTC has an official English-language website, which provides limited or summarised information on the legislation, rules/guidelines, decisions, policies and organisation of the KFTC and summary of relevant judgments by Korean courts. Please note that such information is generally for guidance only and may be potentially out-of-date and limited in scope.



The regulatory authority

Korea Fair Trade Commission (KFTC)

Head. Jae-Chan Jeong (Chairman)

Contact details. 95 Dason-3ro, Sejong 339-730, Republic of South Korea
T +82 44 200 4318 +82 44 200 4533 (Cartel Policy Division)
F +82 44 200 4343 +82 44 200 4444 (Cartel Policy Division)
Eftchotline-1@ftc.go.kr
leniency@ftc.go.kr (Cartel Policy Division)
W http://eng.ftc.go.kr

Responsibilities. The KFTC has the following responsibilities:

  • Competition law enforcement.

  • Policy making.

  • Consumer protection.

Person/department to apply to. Young-Keun Choi, Cartel Policy Division (see above, Contact details).

Procedure for obtaining application documents. Application documents (in Korean) included in the Leniency Notice can be obtained on the KFTC website (see above, Contact details).



Contributor profiles

Jae Young Kim

Yoon & Yang LLC

T +82 2 6003 7509
F +82 2 6003 7030
E jkim@yoonyang.com
W www.yoonyang.com

Professional qualifications. South Korea, 1992; New York, United States, 2004

Areas of practice. Anti-trust and competition; M&A; general corporate; corporate restructuring; international contracts; foreign investment; licensing; financial regulation.

Recent transactions

  • Representing a leading multinational heavy duty commercial vehicle company in the international heavy duty commercial vehicle (truck) cartel investigation by the KFTC.

  • Representing a leading multinational wireless telecommunications component company in the abuse of dominance investigation by the KFTC.

  • Representing a leading multinational CRT/TFT-LCD manufacturer in the international CRT and TFT-LCD cartel investigations by the KFTC.

  • Representing a leading multinational marine hose manufacturer in the international marine hose cartel investigation by the KFTC.

  • Representing a leading multinational air carrier in the international air cargo cartel investigation by the KFTC.

  • Representing a leading multinational chemical company in acquiring a competitor's shares and related merger filing in Korea.

Languages. Korean, English

Professional associations/memberships. Lecturer, Korea Productivity Center, Antitrust Law; Awarded Commendation from the Chairman of the Korea Fair Trade Commission.

Publications

  • Immunity, Sanctions, Settlements, the Know-how section of Global Competition Review, 2014.

  • Cartels and Private Litigation, Korean Bar Association, 2012.

  • South Korea Chapter, Practical Law Cross-border Competition and Cartel Leniency Multi-jurisdictional Guide (co-author), 2008, 2009, 2010, 2011, 2012, 2013.

  • Commentary on the Case concerning Cartels by Four Toilet Tissue Manufacturers, the Korea Fair Trade Commission, 2011.

  • Commentary on the Case concerning Predatory Pricing by Hyundai Information Technology, the Korea Fair Trade Commission, 2011.

  • Cooperation Obligations of Leniency Applicants, the Korea Competition Forum, 2010.

  • Seoul High Court Rejects Multiple Regression Method in a Follow-on Cartel Damages Litigation (co-author), International Law Office, 2010.

  • The Korea Fair Trade Commission Amends the Notification on Implementation of Leniency Program, International Law Office, 2009.

  • Consumer Complaints Management System, the Korea Fair Trade Commission (co-author), 2005.

  • South Korea Streamlines REITs Act, Asialaw, 2004.

  • Korea Amended Securities and Exchange Act, Asialaw, 2004.

  • Economic Analysis on Antitrust Cases, Fair Competition, 2002.

  • Standard of Unreasonableness in International Contract Notice of Korea Fair Trade Commission, Law Research Institute at Seoul National University, 1996.

Paul S Rhee

Yoon & Yang LLC

T +82 2 6003 7532
F +82 2 6003 7033
E psrhee@yoonyang.com
W www.yoonyang.com

Professional qualifications. Connecticut, United States, 1997; District of Columbia, United States, 1998

Areas of practice. Anti-trust and competition; M&A.

Recent transactions

  • Representing a leading multinational elevator manufacturer's Korean subsidiary in follow-on damage action filed by a major customer for damages incurred from a domestic elevator cartel.

  • Representing a leading multinational machine component manufacturer's Korean subsidiary in a cartel investigation.

  • Representing a leading multinational IT company in a merger filing for acquisition of mobile device business of another leading multinational IT company.

  • Representing a leading multinational chemical manufacturer in a merger filing for establishment of a joint venture company with another leading multinational chemical manufacturer.

  • Representing a leading multinational airline in a follow-on damage action filed by a major customer for damages incurred from an international air cargo cartel.

Languages. Korean, English

Professional associations/memberships. American Bar Association (Section of Antitrust Law); Connecticut Bar Association (Antitrust and Trade Regulation Law Section); District of Columbia Bar Association (Antitrust and Consumer Law Section).

Publications

  • Know-How Private Antitrust Litigation – Korea, Global Competition Review (co-author), 2014.

  • South Korea: Cartels and its Aftermath, The American Lawyer (co-author), 2014.

  • South Korea Section, LexisNexis UK's LexisPSL Practice Note on Competition (International Cartel Enforcement & Merger Control) (co-author), 2012, 2013, 2014.

  • South Korea Chapter, Practical Law Cross-border Competition and Cartel Leniency Multi-jurisdictional Guide (co-author), Thomson Reuters, 2008, 2009, 2010, 2011, 2012, 2013, 2014.

  • South Korea Chapter, Global Legal Group's International Comparative Legal Guide to: Cartels & Leniency (co-author), 2010, 2011, 2012, 2013, 2014.

  • LexisNexis UK's Doing Business in Korea (co-author), 2013, 2014.

  • Overlapping Regulations by Sector-specific Regulators and the Competition Authority in South Korean Telecommunications and Financial Industries, CUTS Centre for Competition, Investment & Economic Regulation (co-author), November 2013.

  • South Korea Chapter, Practical Law Mergers & Acquisitions Multi-jurisdictional Guide (co-author), Thomson Reuters, 2009, 2010, 2011, 2012/2013.

  • Korean Antitrust Regulations, South Korea Chapter, The Guide to Competition and Antitrust, International Financial Law Review (co-author), 2008, 2009, 2010.


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