Full Exemption for Belated Cartel Whistleblowers to Be Reduced to 75% Fine Reduction

Reducing Late Leniency Benefits to Promote Proactive Reporting

Significantly Tougher Sanctions for Chronic and Repeat Cartel Offenders

Blocking Evasive Penalty Circumvention through Organizational Restructuring Tricks

Going forward, companies that belatedly admit to collusion as the first whistleblower after the Fair Trade Commission (FTC) has already launched an investigation will no longer receive a full exemption from fines; instead, the reduction will be capped at 75%. In addition, habitual colluding companies that attempt to evade penalties by changing their business name, splitting the company, or transferring their business—so-called "nameplate switching"—will also see their benefits substantially scaled back.

On September 23, the FTC announced the legislative and administrative notice of proposed revisions to the Enforcement Decree of the Monopoly Regulation and Fair Trade Act and the Notice on Operation of the Leniency Program for Self-Reporters of Unfair Collaborative Acts. These revisions focus on the above changes.

Reducing Late Leniency Benefits to Prevent Strategic Waiting

Until now, the FTC has operated a system that granted a full exemption from fines to first whistleblowers, regardless of whether they reported before or after the start of an investigation. However, critics have consistently pointed out a substantial difference in contribution to resolving cases between those who voluntarily and proactively report and those who only cooperate after allegations have been found and investigations have begun. Treating both cases identically could provide an improper incentive for companies to hold out and maximize their profits from collusion until an investigation is imminent.

In response, the FTC will continue to fully exempt first whistleblowers who self-report before the start of an investigation but will reduce the benefit to a 75% fine reduction for those who report after the investigation has commenced. The aim is to incentivize companies to come forward voluntarily before any investigation begins, thereby enabling authorities to detect and dismantle covert cartels early and swiftly.

Heavy Crackdown on Repeat Cartels in 5–10 Years—Reduction Rate Halved

Sanctions against chronic repeat cartel participants will also become much more severe. Previously, a company that reported itself or was sanctioned by the FTC faced restrictions on leniency benefits only if it engaged in collusion again within five years. However, under the revised rules, leniency benefits for self-reporting will be uniformly cut in half for repeat collusion cases that occur between five and ten years after the original offense.

Specifically, a first whistleblower who self-reports before an investigation and is caught repeating cartel behavior will now receive only a 50% reduction in fines, a sharp decrease from full exemption. Similarly, the reduction benefit for first whistleblowers after the start of an investigation will be halved from 75% to 37.5%. Second whistleblowers, who previously received a 50% reduction, will see this cut to 25%. Ultimately, these changes will significantly increase the financial burden for habitual colluding companies.

Closing Loopholes in Organizational Restructuring and Expanding the Scope of Sanctions

The scope and criteria for limiting leniency for companies sanctioned for repeat collusion are being comprehensively revised. Current law restricts leniency only if a sanctioned company repeats collusive activities that violate the same corrective order, creating loopholes for companies operating multiple business areas to evade penalties for new violations in different lines of business. The revision eliminates the requirement that the new illegal act violate the previous corrective order, thereby making leniency restrictions broadly applicable to any new act of collusion, regardless of the business sector or products involved.

New regulations will also be introduced to block attempts to circumvent penalties through organizational restructuring. Previously, it was unclear whether leniency restrictions applied when a company with a history of collusion resumed business as a new entity via a demerger, spin-off, or business transfer, leading to controversy. With the latest revision, the FTC has specified that leniency restrictions will cover successors to any business related to the original cartel, including cases involving mergers, spin-offs, split-mergers, and business transfers.

The FTC plans to collect public comments on the draft amendment to the Enforcement Decree through November 2, and the notice on leniency regulation revision through October 13. After gathering submitted opinions, the commission will proceed with further review processes, including the Ministry of Government Legislation’s review, aiming to finalize and implement the new system in the first quarter of 2027.

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