S. Korea to raise fines sharply for monopolies, cartels

(Yonhap)

The South Korean government unveiled plans Tuesday to sharply raise penalties on monopolistic and cartel behavior, allowing fines of up to 30 percent of related sales, as part of a broader overhaul aimed at strengthening deterrence while easing excessive criminal punishment.

The Fair Trade Commission announced revisions that would lift the maximum fine for market-dominant firms to 20 percent of relevant sales, citing international benchmarks such as the European Union, which allows penalties of up to 30 percent, and Japan, which permits fines of up to 15 percent.

An FTC official said the higher ceiling may appear strict but stressed that enforcement would be calibrated based on the severity and nature of violations.

The move follows growing political pressure after major data-leak incidents involving companies such as Coupang, reflecting President Lee Jae-myung’s view that penalties must be strong enough to threaten a company’s survival when public harm is severe.

Under the plan, cartels that fix prices or output would face fines of up to 30 percent of sales, up from 20 percent. For cases where relevant sales are difficult to calculate, the cap on fixed fines would rise from 4 billion won ($2.8 million) to 10 billion won. Penalties for obstructing transactions—by online platforms, department stores or large retailers—would jump tenfold, from 500 million won to 5 billion won, while prison terms would apply only if corrective orders are ignored.

Fines would also be raised for other violations, including the failure to pay subcontractors after receiving advance payments, improper franchise contracting practices, and lapses by telecom operators in preventing location data leaks. In addition, a new penalty regime will be introduced for violations involving excessive economic concentration, such as illegal practices by holding companies.

The government said the overhaul is designed to strengthen financial accountability for serious misconduct, while reducing excessive reliance on criminal punishment, thereby recalibrating enforcement to enhance deterrence without discouraging legitimate business activity.

At the same time, the reform package eases penalties for minor administrative breaches by shifting certain offenses from criminal sanctions to administrative fines. For instance, if an automaker fails to submit documents verifying compliance with greenhouse gas emissions standards by the deadline, the existing 3 million won criminal fine would be converted into a 3 million won administrative penalty. Similarly, the unauthorized use of business names resembling regulated financial terms such as “financial investment” or “securities” would be downgraded from up to one year in prison to an administrative fine of up to 30 million won.