Hello, this is attorney Sangyoon Eom of Cheongchul Law Firm.

Antitrust violations such as cartels, unfair support of affiliates, technology misappropriation, and resale price maintenance are, by their nature, mostly carried out covertly within companies, making them very difficult to detect and prove from the outside. For this reason, the Korea Fair Trade Commission (KFTC) has operated a whistleblower reward system that pays rewards to those who report or tip off violations, alongside the leniency program that exempts or reduces surcharges for voluntary reporters (so-called 'leniency,' Article 44 of the Monopoly Regulation and Fair Trade Act, 공정거래법 제44조), thereby promoting swift detection of violations and strengthening the market's self-monitoring function.

Against this backdrop, the KFTC recently brought into force, effective June 18, 2026, an amendment to the Regulation on Payment of Rewards to Reporters of Violations of the Fair Trade Act, etc. (the 'Reward Notice', 포상금 고시). The core of the amendment is the abolition of the previous cap of up to KRW 3 billion on reward payments and allowing payment of up to 10% of the imposed surcharge without limit. This significantly raises the level of whistleblower rewards while strengthening reporting incentives for violation types that are hard to prove, such as unfair support, private benefit appropriation, and technology misappropriation. Today, we will examine the key contents of the amended Reward Notice and the practical implications that companies and their executives and employees should keep in mind.

[Key Contents of the Amended Reward Notice]

This amendment brought considerable changes across the whistleblower reward system as a whole, the main contents of which are as follows.

1. Abolition of the reward payment cap and payment of up to 10% of the surcharge

The previous Reward Notice applied differentiated rates by surcharge bracket while setting a payment ceiling of up to KRW 3 billion. As a result, even in large-scale cartel cases involving substantial surcharges, rewards were limited, drawing criticism that reporting incentives did not function effectively. The amended Reward Notice abolished both the bracket-based differentiated rates and the cap, switching to a single system under which 10% is uniformly applied to the imposed surcharge to set the base payment amount. Through a press release, the KFTC indicated that, taking as an example the recently detected flour-milling cartel case, applying the new system would allow a reward of up to approximately KRW 67.1 billion, or 10% of the KRW 671 billion surcharge (provided that the evidence submitted by the reporter qualifies as the 'highest' grade, to which a 100% reward rate applies).

2. Introduction of a phased reward payment system

As substantially increased rewards became payable, the amended Reward Notice introduced a phased payment system to prepare for the possibility that appeal proceedings against a surcharge imposition delay its finalization and deposit into the national treasury: (i) the base reward (minimum base payment amount by violation type × reward rate) is paid first when the surcharge is initially deposited into the treasury, and (ii) the remaining reward (10% of the surcharge × reward rate − base reward) is paid after the surcharge finally confirmed upon the conclusion of appeal proceedings is fully deposited into the treasury. The reward rate is differentiated by the grade of evidence submitted by the reporter: 'highest' 100%, 'high' 80%, 'medium' 50%, and 'low' 30%.

3. Expansion of the scope of recognized evidence for unfair support and private benefit appropriation

For unfair support of affiliated companies or private benefit appropriation favoring the controlling family, proving illegality based solely on whether transaction terms are favorable or unfavorable has its limits, and proof of the key element, 'intent to support,' is highly important. However, since intent to support is difficult to ascertain objectively from the outside, there is a substantial practical need to induce internal reporting. Accordingly, the amended Reward Notice, which previously recognized only the submission of information on 'transaction details' and 'transaction terms' as evidence for calculating the reward rate, now also includes within the scope of recognized evidence cases where information on 'intent to support' necessary to prove the violation is submitted.

4. Establishment of grounds for raising the reward rate to eradicate technology misappropriation

With respect to technology misappropriation, which is difficult to report given the superior-subordinate dynamics between prime and subcontractor businesses, grounds were established to allow the reward rate to be adjusted upward where a party contributes to eradicating violations through organic and continuous cooperation with the KFTC, such as the activities of a 'technology protection monitor' commissioned by the KFTC.

5. Newly established grounds for reducing rewards according to the reporter's circumstances

To prevent abuse of the system, the amended Reward Notice newly established grounds to reduce the calculated reward within a range of 30%, comprehensively considering the reporter's (i) level of cooperation with the investigation, (ii) whether and for how long and to what degree the reporter participated in the violation, and (iii) compliance with social responsibility. However, to avoid diminishing the incentive to report, the reduction is expressly limited to the 'minimum necessary extent.'

[Significance of the Related Legal Framework and the Whistleblower Reward System]

The whistleblower reward system is grounded in Article 90 of the Fair Trade Act (공정거래법 제90조) and Article 91 of its Enforcement Decree (같은 법 시행령 제91조), and is operated across six laws under the KFTC's jurisdiction, including Article 44 of the Door-to-Door Sales, etc. Act (방문판매 등에 관한 법률 제44조), Article 26 of the Enforcement Decree of the Act on Fair Transactions in Large Retail Business (대규모유통업에서의 거래 공정화에 관한 법률 시행령 제26조), Article 22(5) of the Subcontracting Transactions Fairness Act (하도급거래 공정화에 관한 법률 제22조 제5항), Article 19-2 of the Enforcement Decree of the Fair Agency Transactions Act (대리점거래의 공정화에 관한 법률 시행령 제19조의2), and Article 17 of the Enforcement Decree of the Franchise Business Transactions Fairness Act (가맹사업거래의 공정화에 관한 법률 시행령 제17조).

This whistleblower reward system has formed, together with the leniency program that grants exemption from or reduction of surcharges and criminal punishment to voluntary reporters of violations (Article 44 of the Fair Trade Act, 공정거래법 제44조), the two pillars of detecting violations. However, the two differ clearly in character: (i) the leniency program exempts or reduces sanctions that would be imposed where a business that participated in a violation voluntarily reports itself, whereas (ii) the whistleblower reward system pays a reward for the public-interest contribution where a third party who became aware of the violation from the outside, or an insider of a participating business, reports or tips it off. Previously, because the effect of leniency was so powerful (100% surcharge reduction and exemption from criminal referral for the first-ranked reporter, etc.), the whistleblower reward system tended to receive relatively little attention; however, as this amendment now makes rewards of up to several tens of billions of won possible, the system is expected to be actively utilized going forward.

[Practical Implications]

From a company's standpoint, it is necessary to clearly recognize that the need to strengthen internal compliance systems has grown greater than ever. Previously, even if violations such as cartels, unfair support, or technology misappropriation were exposed externally, the reward a reporter could receive was capped at KRW 3 billion, so reporting incentives were limited; after the amendment, however, rewards in the range of tens of billions of won are possible in large-scale cases, dramatically increasing the likelihood that even one of the internal participants will go ahead and report. Since this effectively means the normalization of whistleblowing risk, companies need to respond by (i) overhauling preventive systems against unfair concerted acts, unfair support, and the like, (ii) establishing rapid-response frameworks that combine self-detection through internal reporting channels with use of the leniency program, and (iii) strengthening periodic internal compliance checks and employee training.

Meanwhile, from the standpoint of executives, employees, and counterparties who become aware of a violation: (i) they need to organize and submit thoroughly the materials in their possession at the time of reporting so as to objectively prove the grade of evidence, which directly affects the reward rate calculation; (ii) in unfair support and private benefit appropriation cases, it is advantageous for reward-rate recognition to also submit materials that directly prove the 'intent to support' (internal emails, meeting minutes, instruction documents, etc.) rather than mere transaction terms; and (iii) where the reporter has partly participated in the violation, the reporter should determine the timing and method of reporting only after sufficiently reviewing in advance the possibility of criminal liability or internal personnel measures, and should bear in mind that the reward may be reduced depending on the degree of participation.

Finally, it should be noted that this amendment applies to cases reported or tipped off on or after the effective date of June 18, 2026, while the former Reward Notice continues to apply to cases already reported or tipped off before that date. Accordingly, those considering reporting a violation may secure the benefit of the amended reward calculation standards by adjusting the timing so that the report is made on or after the effective date.