Hello, I am Law Firm Cheongchul, Attorney Eom Sang-yoon.
Today, we will learn about the reward system operated by the Fair Trade Commission.
[Fair Trade Commission Reporting Reward]
Generally, violations of laws regarding monopoly regulation and fair trade, such as collusion and self-dealing, are often conducted secretly, making detection and sanctions difficult. To encourage active reporting of violations, the Fair Trade Commission ("FTC") has established the ‘Reporting Reward System’ since 2005, which grants rewards to those who report violations of six laws, including the Fair Trade Act, and submit evidence for the first time.
Enforcement Decree of the Fair Trade Act Article 91 (Payment of Rewards) ① The Fair Trade Commission may pay rewards within the budget to those who report or provide information on the violations listed in each of the following subparagraphs and submit evidence to substantiate this for the first time. However, this does not apply if the informant or reporter is the business operator who committed the violation. (…) ② Unless there are special circumstances, the Fair Trade Commission must pay the reward within 3 months from the date it decides that the reported or informed activity is a violation (if there is an objection, from the date of the ruling). ③ The Fair Trade Commission may establish a reward review committee to discuss matters related to the payment of rewards. |
In practice, the FTC pays rewards to reporters based on the conditions set forth in the Enforcement Decree of the Fair Trade Act and the 'Regulations on Payment of Rewards to Informers of Violation of Fair Trade Act, etc.' ("Reporting Reward Notification"). Notably, in June 2021, the FTC awarded the highest ever amount of 1.75597 billion KRW to informants of the 'collusion case involving seven steel manufacturers.'
Considering the scale of these payments, it seems that the FTC will continue to actively utilize the Reporting Reward System in the future.
[Payment Conditions for Rewards]
The subjects eligible for reporting rewards consist of 15 types of acts under six laws managed by the FTC (Fair Trade Act, Door-to-Door Sales Act, Large Retail Business Act, Subcontracting Act, Agency Act, Franchise Transactions Act), and the payment amounts are calculated by multiplying the determined basic payment amount for the level of actions (warning, corrective order, penalties) by the payment percentages based on the level of submitted evidence (highest, high, medium, low).
However, merely reporting illegal acts does not qualify for receiving a reward; necessary evidence to substantiate the reporting content must be submitted. In cases where there are multiple reports or tips regarding the same violation, the person who submits the evidence for the violation for the first time will be entitled to the reward.
Therefore, in order to receive a reward, one must secure evidence based on the reported content, and the more the information relates to facts unknown to the FTC, the more favorably the decision regarding the payment and amount of the reward can be perceived.
However, if fraudulent means such as illegal collection of evidence, false reporting, false testimony, or forgery of evidence are employed, it may be required to return the already awarded reward (Enforcement Decree of the Fair Trade Act, Article 91, Paragraph 4), so one should not create false evidence for reporting.
[Examples of Rewards Paid]
The FTC has established a ‘Reporting Reward Review Committee’ to review the payment of rewards. The committee can deliberate on whether the subjects qualify for rewards, whether the payment conditions are met, and the amount of the reward, and the rewards will be paid within the allocated budget based on the results of the deliberation.
Recent cases where rewards have been paid include matters where agreements on bid-rigging were submitted, instances of capturing and submitting price lists posted in business association internet cafes, and submissions of internal standards and management status documents related to rebate payments. In particular, there have been the most cases of rewards paid for reports of collusion (unjust joint actions) and the highest amounts of rewards.
[Need for Reporting Representation]
Reporting to the FTC requires expert assistance regarding whether the actions meet the requirements for illegality, what evidence is needed, how to respond during the investigation process, etc. Of course, reporting only for the purpose of receiving a reward is inappropriate, but instead of overlooking illegal activities, why not choose to report to the FTC, which may also lead to rewards?
If you are hesitating due to complex and difficult concepts and procedures, please consult with Law Firm Cheongchul.
Law Firm Cheongchul is composed of attorneys from Korea's top five law firms, namely Kim & Chang, Kwangjang, Taepyeongyang, Sejong, Yulchon, and corporate legal teams, and not just one attorney, but specialized attorneys in the relevant fields form teams to handle each case. Cheongchul provides comprehensive solutions for the entire business, focusing on achieving what clients want, rather than just solving specific issues. If you need help achieving your goals, do not hesitate to contact Cheongchul.
