South Korea strengthens fines for large retailers' unfair practices

South Korea is set to toughen penalties for unfair business practices by major retailers, including department stores, hypermarkets, and online platforms. The Fair Trade Commission (FTC) announced plans to revise the Large-Scale Distribution Business Act, focusing on making fines more proportional to the offense.

A key change involves expanding the application of proportional fines, which are calculated based on the scale of the violation. Currently, fixed fines are often imposed when determining the exact violation amount is difficult. The FTC will now incorporate 'related supply contract amounts' into the calculation for proportional fines, creating a two-tiered system. Proportional fines will be applied when the violation amount can be determined, and when it cannot, the related supply contract amount will be used.

Furthermore, the penalty基準 rates for proportional fines will be increased. The current rates, ranging from 60% to 140% of the violation amount based on severity, will be raised to 80% to 200%. The severity classification will also be expanded from three to four levels. A new set of penalty rates, ranging from 1% to 10%, will be introduced for cases where fines are based on related supply contract amounts.

Penalties for repeat offenders will also be significantly enhanced. The current system allows for a maximum 50% increase in fines for violations within the past three years. The revised regulations will extend this look-back period to five years and increase the maximum penalty surcharge to 100%. Conversely, reductions for cooperation during investigations will be lowered from a maximum of 20% to 10%, and reductions for voluntary correction will be halved from 50% to 10%. The FTC plans to finalize these revisions by the end of the year after a public comment period.