Dedicated Watchdog for Merger Remedies Codified to Block "Sham Compliance"

Introduction of U.S.- and EU-Style "Implementation Monitoring Bodies"
Maximizing the Effectiveness of Corrective Measure Oversight
Granted Powers Ranging from Compensation Approval to On-Site Inspections

The Korea Fair Trade Commission (KFTC) will establish a legal basis for the formation and operation of a dedicated body to monitor whether corrective measures imposed after merger reviews are properly implemented in practice.

The KFTC said on Nov. 9 that it has drawn up a proposed revision to its Public Notice on Standards for Imposing Corrective Measures in Business Combinations and will invite public comment for approximately 20 days, from Nov. 10 to Dec. 1. The key feature of the revision is to set out the authority and obligations of an “Implementation Monitoring Body,” which is fully independent of the parties to a business combination, so it can thoroughly review whether companies are complying with corrective measures.

Until now, the KFTC has relied on comprehensive guidelines for administering corrective measures covering all types of violations to monitor compliance by companies involved in business combinations. However, the absence of separate rules tailored to business combinations has limited the effectiveness of post-merger oversight. In particular, the KFTC has recently imposed increasingly complex behavioral remedies requiring prolonged, specialized monitoring in cases involving anti-competitive business combinations. These remedies go beyond structural measures such as asset divestitures and may require companies to separate data technology for a specified period. In response, the KFTC has overhauled the system, drawing on practices commonly used by foreign competition authorities, including those in the United States and the European Union (EU), so that a monitoring body with the necessary expertise and independence can take charge of initial inspections and reporting.

The newly established Implementation Monitoring Body will prioritize ensuring complete independence to prevent companies from exerting any influence. The parties to a business combination must appoint experts capable of performing their duties independently of them as members of the Implementation Monitoring Committee, subject to KFTC approval. To prevent monitoring from becoming less rigorous, companies must obtain the KFTC’s prior approval for both the criteria used to calculate the members’ compensation and the specific amounts. The rules also expressly prohibit the exchange of any financial compensation beyond the approved fees. If the KFTC determines that a member may be unable to perform their duties independently and impartially, it can require the parties to the business combination to dismiss that member immediately.

The body will also be given substantive investigative powers, going beyond simple monitoring. The Implementation Monitoring Committee, which performs its duties under the KFTC’s direction and supervision, may regularly request that the parties to a business combination provide details and documentation on their implementation of corrective measures. It will also have the authority to conduct on-site inspections by visiting business premises directly when necessary. In addition, to provide flexibility in addressing the complexity of corrective measures, the KFTC has designated not only the collegial Implementation Monitoring Committee but also a “Monitoring Trustee,” a single-person body, as possible monitoring bodies.

The KFTC plans to review opinions submitted by stakeholders and others during the public comment period, finalize the proposed revision after deliberation by its full committee, and put it into effect.

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