Authority Of The Fair Trade Commission To Conduct Investigations

Under the Monopoly Regulation and Fair Trade Act (MRFTA), the Korea Fair Trade Commission may conduct an investigation of its own accord by taking the following measures if it deems that a violation of the act has occurred or is occurring (Articles 49 and 50 of the MRFTA):

  • Issue summons to the parties concerned, interested parties or witnesses, to a hearing or designated place to elicit their testimony;
  • Order the enterprise or trade association, or its officials and employees, to submit reports relating to costs and business conditions, business records, company books, documents or other materials or objects deemed necessary, or detain such materials or objects submitted (a process known as the request for materials);
  • Authorize its staff to carry out on-site investigation – that is, to enter or have access to the offices or workplaces (including means of transport) of the enterprise or the trade association to examine business records and company books, irrespective of the medium on which they are stored; or, during the on-site investigation, order the enterprise or trade association or its officials and employees to submit materials or objects deemed necessary to the investigations and/or retain the materials or objects submitted if the Commission is concerned that evidence may disappear. This investigative authority extends to access to all offices or workplaces containing documents and files which relate to the investigation. However, this does not extend to access to other premises, land and means of transport of directors, managers and other members of staff or employees of the enterprise or trade association; and
  • Ask representatives or employees of the enterprise or trade association for explanation of facts or documents relating to the subject matter of the investigation.
Obligation To Cooperate With The Commission's Investigation

The Fair Trade Commission's investigation is in nature voluntary, in that it is not entitled to use coercive force in conducting its investigation. An investigation may only be conducted with the express or implied consent or cooperation from the entities being investigated. There is no obligation under the MRFTA for the investigated entities to comply with the investigation.

However, despite the voluntary nature of the investigation, the Commission does have the authority to issue certain sanctions in the case of non-compliance. That is, it may impose administrative fines for non-compliance with the investigation. The maximum penalty that may be imposed on the enterprise or trade association being investigated is W100 million (US$109,000) for failure to appear following a summons without a justifiable cause, refusal to submit materials requested by the Commission or submission of false materials. The penalty is W200 million for refusal or obstruction of an on-site investigation. The maximum penalty to be imposed on any officer, employee or other interested party of the enterprise or trade association being investigated is W10 million for the former cases, and W50 million for the latter.

If the enterprise or trade association refuses to pay the administrative fines imposed on it for failure to cooperate with the investigation, the Commission can collect them through a procedure for collecting unpaid taxes administered by the National Tax Service (Article 69-2 of the MRFTA). Under the procedure, the National Tax Service may seize properties owned by a defaulting taxpayer, sell the properties through public sale, apply proceeds of the sale to unpaid portions of the tax and return the remaining portion of the proceeds, if any, to the owner of the properties. Any credits that the entity refusing to pay administrative fines has against its Korean customers in the course of its sales of products or services may also be subject to this tax collection procedure.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.