Companies with Excellent Compliance Programs to Get Up to 20% Fine Reduction

2024.06.04. The Fair Economy — Businesses that adopt and operate an excellent Compliance Program, CP will be able to receive up to a 20% reduction in penalty surcharges.

The Fair Trade Commission announced that an amendment to the "Enforcement Decree of the Monopoly Regulation and Fair Trade Act (Fair Trade Act)," which sets out CP evaluation standards and procedures and criteria for reducing corrective measures and fines for companies with excellent ratings, passed a Cabinet meeting on the 4th.

This revision of the enforcement decree is a follow-up measure to implement the revised Fair Trade Act in connection with the legal codification of CP. Alongside it, a new notice setting out detailed matters related to CP evaluation procedures, the "Regulation on CP Operation and Evaluation," has also been enacted. Both the enforcement decree and the notice are set to take effect on the 21st.

Under the enforcement decree and the notice, businesses that receive a CP evaluation rating of AA or higher can receive a fine reduction of up to 10% (for AA) or 15% (for AAA), once within the two-year validity period. If a business itself proves that it detected and stopped a violation of the law through the effective operation of its CP before the Fair Trade Commission began an investigation, it can receive an additional reduction of up to 5%, for a maximum total fine reduction of 20%.

In addition, businesses with a grade of A or higher can, once within the validity period, receive a reduction in the number of media outlets, size, and duration of publication regarding the fact that they received a corrective order, depending on their evaluation grade.

Meanwhile, the Fair Trade Commission has carefully supplemented and designed the system to ensure rigorous, substantive evaluations and to prevent CP from being misused as a means of securing fine reductions. First, the Fair Trade Commission assigns final ratings through a three-stage evaluation process — document review, on-site assessment, and in-depth interview assessment (for AA or higher) — carried out by designated specialized evaluation institutions such as the Korea Fair Trade Mediation Agency.

In addition, exception requirements for reductions in corrective measures and fines have also been strictly defined. Specifically, reduction benefits will not be granted in cases where ▲a compliance officer or similar person was involved in the violation, ▲the violation occurred before the CP was adopted, ▲the violation involves unfair collaborative acts with significant anti-competitive effects, such as price-fixing, or ▲an executive was directly involved in the violation. Furthermore, if a business receives a fine or is referred for prosecution by the Fair Trade Commission within the validity period, its previously assigned evaluation rating will be lowered (by one level for a fine, two levels for a referral for prosecution).

The Fair Trade Commission said, "We expect this amendment to the enforcement decree to improve transparency and predictability regarding the CP system. Going forward, we plan to operate all related procedures — including evaluation and the granting of incentives — objectively and rigorously, so that CP can function effectively on the ground in corporate management and contribute to spreading a culture of voluntary fair trade compliance."