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Newsletter | December 2016, Issue 4
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ANTITRUST & COMPETITION
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KFTC Announces Proposed Amendments to Its Leniency Guidelines
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On March 29, 2016, the Monopoly Regulation and Fair Trade Act (“Fair Trade Law” or “FTL”) was amended to include a new provision that denies leniency benefits to repeat cartel offenders (for five years from their previous leniency application, resulting in a full or partial immunity from sanctions).
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On September 30, 2016, the Korea Fair Trade Commission (“KFTC”) amended its “Notice on the Operations of the Leniency Guidelines for Voluntary Disclosure of Unfair Collusive Acts” (“Notice”).
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Key amendments to the Notice include:
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New Standards for Determining the Timing of Leniency Applications
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Prior to the amendment, the KFTC’s receipt of the leniency applications was judged under the civil law theory of “acceptance upon arrival.”
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Now, the amended Notice explicitly states that the leniency application is deemed to have been formally received by the KFTC upon their arrival, ensuring a more consistent implementation.
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Oral leniency application exception: Considering the long time needed in recording/filming the oral application, the oral application will be deemed to have been formally received by the KFTC as of the time the applicant begins the recording/filming of the application.
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Improvements to the “Amnesty Plus” System
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Under the Fair Trade Law, cartel participants are granted leniency for both cartels where they: (i) missed the opportunity to secure a leniency position for one cartel; and (ii) are the first to voluntarily disclose the details regarding another cartel. This is called the “Amnesty Plus” System.
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Before the amendment, the Notice simply stated that “the leniency for the relevant act shall be decided based on the severity of the other cartel activity reported by the amnesty plus applicant,” and did not provide specific standards for cases where there are multiple collusive acts under investigation.
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The amended Notice specifies that the extent of leniency that may be granted in cases involving multiple cartels will be based on a comparison between the aggregate relevant revenues of the cartel under investigation, and the aggregate relevant revenues of the other cartel reported by the amnesty plus applicant. The resulting ratio will be applied to each cartel.
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Conditions Added to Leniency Position Succession
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Before the amendment, the Notice stipulated that if a leniency applicant withdraws its leniency application or loses its leniency position, the next leniency applicant in line will succeed the leniency position of the outgoing leniency applicant.
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The amended Notice provides that the succession of the leniency position is conditioned on satisfying the requirements for maintaining the leniency position to be succeeded by the next leniency applicant.
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The amendment strengthened the need for leniency applicants to maintain the requirements for leniency until the end of the investigation. This demonstrates KFTC’s determination to strictly operate the leniency program.
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Standards for Determining Repeat Cartel Offenders Deleted
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Before the Amendment, the Notice restricted leniency for: (i) collusive acts or violations of the corrective measures after the date of corrective action; and (ii) collusive acts after the date of leniency.
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However, the amended Fair Trade Law moved the standards for identifying repeat cartel offenders from the subordinate regulations to the Fair Trade Law itself. As such, the KFTC deleted the relevant provisions from the Notice: (ii) (above) was deleted because of redundancy, but (i) (above) is still included.
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