'98% Monopoly' on Soju Ingredient Unlocked... Direct Ethanol Transactions to Expand from 2% to 10% Next Year

Announcement of Anticompetitive Regulation Reforms for the First Half of 2026
Regulatory Overhaul in Six Key Sectors

The gates restricting the monopolistic structure of the ethanol (the main ingredient of diluted soju) distribution market will be lifted. The permitted volume that allows liquor manufacturers to transact directly with ethanol manufacturers, bypassing wholesalers, will be dramatically expanded to five times the current level. Entry will also be fully allowed for out-of-region companies in the household waste collection and transportation market, which had been locked in regional cartels.

The Fair Trade Commission, after consultations with relevant ministries on the 25th, finalized and announced the “Plan for Improving Anti-Competitive Regulations for the First Half of 2026 (six items).” The purpose is to revise structurally monopolistic markets that have long obstructed market entry or restricted business activities, in order to induce real competition.

'98% Pass Through Wholesalers'—Shaking Up the Ethanol Market... Direct Transactions Expanded to 10%

The most notable point is the reform of the ethanol distribution structure. Currently, direct transactions between liquor manufacturers and ethanol producers are limited to about 2% of the total distribution volume—around 30,000 drums per year. The remaining 98% must go through Daehan Ethanol Sales Co., Ltd., the sole ethanol wholesale trader, which has fundamentally blocked price and quality competition among ethanol producers and restricted purchasing autonomy for liquor manufacturers.

Starting in 2027, the government will immediately expand the allowed amount for direct ethanol transactions to 10% of total sales volume. The Fair Trade Commission plans to further increase this percentage incrementally after comprehensively evaluating the market competition environment and the impact on domestic grain supply. The fivefold increase in direct transactions is expected to trigger price competition among producers.

Blocking 'Regional Monopoly' in Waste Collection Cartels... Special Rule for Enhancing Accounting Firms Introduced

The entry barriers in the household waste collection and transportation market, which has been troubled by collusion and monopoly issues, will also be lowered. Until now, basic local governments were criticized for issuing permits mainly to companies within their jurisdictions corresponding to the numbers of bid areas, and for blocking the entry of out-of-region companies—effectively allowing a small number of firms to maintain long-term monopolies.

From now on, if a company already approved in a specific local government applies for additional or changed service areas in another local government, the guidelines will be revised so that such permits are, in principle, granted unless there are legal conflicts—invigorating competitive bidding among local governments.

In the corporate audit market, a mechanism will be introduced to ease the concentration on large accounting firms. Under the periodic designation system, the so-called “group promotion special rule” will allow mid-sized and small accounting firms (Category B/C) that have demonstrated excellent audit quality to take on audits for companies one tier above their class. In addition, the current requirement for the number of full-time certified public accountants at regional branch offices—previously three or more—will be relaxed to just one or more, significantly expanding the choice of auditors available for local businesses.

The regulation that mandated sanitary ceramics and their components be supplied only as a “single packaging unit” during toilet environmental labeling certification will also be abolished. This measure is intended to secure market access for domestic component manufacturers, who were put at a disadvantage in the import process of foreign sanitary ceramics due to additional logistics and repackaging costs.

The Fair Trade Commission plans to continue consultations with relevant ministries, focusing on industries with high entry barriers in the second half of this year, and will release additional regulatory reform tasks at the end of the year.

This content was produced with the assistance of AI translation services.