Korean FTC’s fine collection rate hits 5-yr low in 2024

FTC

The fine collection rate of South Korea’s Fair Trade Commission (FTC) has reached the lowest level in five years as of October 2024, with the amount standing at 530 billion won ($384 million), data showed on Sunday.

According to data obtained by Representative Yoon Han-hong of the People Power Party from the FTC, the amount of fines the FTC decided to collect this year was 718 billion won as of October.

Only 189.6 billion won, however, has been collected, leaving 528.3 billion won unpaid.

It is the second-largest unpaid amount in the past five years, following 533 billion won in 2022.

The collection rate of 26.4 percent was also a sharp drop compared to past rates, which ranged from a minimum of 45 percent to a maximum of 65 percent.

In particular, of the unpaid amount this year, the amount deferred due to court suspensions totaled 209.6 billion won (39.6 percent), the highest in the last five years.

It was also a far cry from the second-highest amount of 37.2 billion won (7.0 percent) in 2022.

Deferred amounts represent cases in which companies have requested a suspension of fine enforcement, leading to legal disputes. The FTC can only collect these funds if it wins the final judgment.

The amount of discretionary arrears, or unpaid fines without specific reasons, is also on the rise, totaling 78.1 billion won (14.8 percent) this year, up from 36.3 billion won (11.7 percent) in 2020.

Unpaid amounts also include overdue amounts that are still due as some companies have applied for installment payments.

The FTC noted that this year’s collection rate has dropped due to the installment collections of a large fine of 160 billion won imposed on Coupang Inc.

However, the installment total of 240.5 billion won (45.6 percent) this year is the second lowest in the past five years.

Its proportion has also dropped compared to previous years, when it ranged from 62.3 percent in 2021 to 80 percent-90 percent from 2020 to 2022.

Data, in the meantime, showed that the FTC has only one person in charge of collecting fines.

In the past, the FTC outsourced the collection of fines to the National Tax Service, but the practice discontinued due to manpower issues.

Representative Yoon emphasized the need for a comprehensive review of the FTC’s arrears management system.

“The increase in discretionary arrears and the trend of prolonged overdue periods are becoming more evident,” the lawmaker said. “Given the higher proportion of deferred fines, the FTC should make more efforts to improve the accuracy and rationality of fine imposition.”