South Korea to toughen penalties for retail giants' '갑질'

South Korea's Fair Trade Commission (FTC) is set to significantly increase penalties for large retail companies that abuse their power over suppliers. The revised Fair Trade Act enforcement decree and penalty guidelines, announced on August 27, aim to curb "갑질" (gapjil), a term describing the unfair exercise of power by dominant entities.

Under the new rules, fines will be imposed based on supply prices even when the exact amount of the violation is difficult to calculate. Previously, a fixed fine of up to 500 million won was applied in such cases. However, the FTC noted that fixed fines were applied in a majority of cases over the past decade, undermining the intended punitive effect. The revised system prioritizes proportional fines, with fixed fines only being a last resort when even supply prices cannot be determined.

The penalty rate itself will also be raised. The current rate, which ranges from 60% to 140% of the violation amount depending on severity, will be increased to 80% to 200%. For particularly serious offenses, the fine could reach 180% to 200% of the violation amount. A separate rate of 1% to 10% will apply when supply prices are used for calculation. Furthermore, penalties will be significantly increased for repeat offenders, with a 50% surcharge for a single past violation and up to a 100% surcharge for multiple offenses.

The FTC is also reducing grounds and scope for leniency in penalty calculations. These measures signal a stronger stance against unfair trade practices in South Korea's retail sector, aiming to create a more equitable environment for suppliers.